2019/09/01 Meritage Homes of California, Inc. CFD No 2019-1 Meadow Run Acquisition, construction and funding agreement EXECUTION COPY
COMMUNITY FACILITIES DISTRICT NO. 2019-1
OF THE CITY OF MENIFEE (MEADOW RUN)
ACQUISITION, CONSTRUCTION AND FUNDING AGREEMENT
THIS AGREEMENT is made and entered into by and between CITY OF MENIFEE (the
"City"), acting for and on behalf of itself and COMMUNITY FACILITIES DISTRICT NO. 2019-1
(MEADOW RUN) OF THE CITY OF MENIFEE (the "Community Facilities District" or "CFD")
and MERITAGE HOMES OF CALIFORNIA, INC., a California corporation (the "Developer"),
each individually a "Party" and collectively the "Parties."
WHEREAS, Developer has requested that the City consider the formation of a
community facilities district pursuant to the provisions of the Mello-Roos Community Facilities
Act of 1982, as amended (the "Act"), and has undertaken proceedings for the authorization of
special taxes and issuance of bonded indebtedness for the payment of the construction and/or
acquisition of certain public improvements to be owned, operated or maintained by the City,
Eastern Municipal Water District (the "Water District") and Menifee Union School District (the
"School District") and incidental expenses in accordance with the Act; and
WHEREAS, in order to proceed in a timely way with development of its property within
the CFD which is described in the attached Exhibit "A" (the "Developer Property"), Developer
desires to fund through the Community Facilities District (i) the City's acquisition or construction
of certain public improvements that are to be owned, operated and maintained by the City (`City
Improvements"), as more particularly set forth and described in the Description of Cost
Estimates attached hereto as Exhibit "B," (ii) improvements included in the City's fee programs
(the "City Fee Facility Improvements"), as more particularly set forth and described in Exhibit
"B" and (iii) the improvements of the Water District and the School District described in Exhibit
"E" hereto (the "Miscellaneous Improvements") (collectively the "Improvements"); and
WHEREAS, the City is authorized by the Act to form the CFD and to issue bonds
secured by Special Taxes (as defined in Section 2.2) of the CFD (the "Bonds") to fund the
Improvements, and
WHEREAS, the City Council has adopted the City's policies and procedures concerning
the use of special district financing programs to finance City facilities (the "Policy"); and
WHEREAS, the purpose of this Agreement is to constitute a formal understanding
between Developer and the City (pursuant to the requirements of Government Code
Section 53313.51 and other provisions of the Act and the Policy) concerning financial and other
obligations and responsibilities related to the formation of the Community Facilities District and
the Improvements to be financed by the Community Facilities District, when and if formed, to the
extent funds are available, and to set forth the conditions upon which (1) the Community
Facilities District will reimburse Developer or its designee for the cost of the City Improvements
constructed by or on behalf of the Developer and (2) the Community Facilities District will fund
the City Fee Facility Improvements and the City will grant credit against applicable City fees;
and (3) the Community Facilities District will also fund Miscellaneous Improvements, if any,
which will be described in Exhibit "E," if applicable.
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NOW, THEREFORE, it is mutually agreed between the respective Parties as follows:
SECTION 1. FEASIBILITY STUDY
The City has retained, at the Developer's expense, the necessary consultants to analyze
the proposed formation of the CFD, including the special tax consultant, bond counsel, and
other consultants deemed necessary by the City. The Developer has advanced to the City a
sum of money for such costs, all or a part of which may be eligible for reimbursement from the
CFD in accordance with the Reimbursement Agreement dated as of September 1, 2019 (the
"Reimbursement Agreement") between the Developer and the City.
SECTION 2. SALE OF BONDS
2.1 City Policies. The City Council has adopted the Policy, setting forth the City's
policies and procedures concerning the use of special district financing programs to finance the
Improvements. Pursuant to the Policy, the total annual amount of the special taxes to be
collected with respect to a parcel within the CFD and all other taxes and assessments which will
be collected with respect to such parcel must not exceed two percent (2%) of the Fair Market
Value (as defined in the Policy) of such parcel.
The Parties hereby agree that, unless waived by the City, at the time of issuance of the
Bonds, the ratio of the value of all parcels of property for which the Bonds are being issued to
the amount of outstanding community facilities district or assessment district bonds attributable
to such parcels (the "Value-to-Lien Ratio") may not be less than four-to-one (4:1). Unless
waived by the City, the Fair Market Value of the property within the Community Facilities District
for purposes of determining the foregoing ratio will be determined based on the appraised value
of the property based on the appraisal made by an appraiser selected by the City with a
valuation date within three (3) months of the issuance of the Bonds, or, with respect to
developed projects (as determined in the sole discretion of the City) or issuance of refunding
bonds, the assessed value of the property. Subject to satisfaction of the Policy and the
requirements of this Agreement, the City shall use its best efforts to issue and sell the Bonds in
one or more series in an amount sufficient to fund the Improvements in accordance with the
schedule for development of the Developer Property.
2.2 Security for Payment of Special Taxes.
(a) Concurrently with the issuance and sale of each series of the Bonds, the owner
of any land within the Community Facilities District, together with land owned by any affiliate
(collectively, an "Account Party"), the Maximum Special Tax for the then-current fiscal year (as
defined in the Rate and Method of Apportionment of Special Tax for the Community Facilities
District (the "Rate and Method") and such Special Tax referred to herein as the "Special Tax" or
"Special Taxes"), applicable to which equals or exceeds 20% of the aggregate Maximum
Special Tax authorized to be levied in the Community Facilities District in such fiscal year, shall
deliver to the City either (i) a renewable, irrevocable instrument of credit from a financial
institution (rated "A" or better) or (ii) cash in-lieu thereof (a "Security"). The Security shall be in
an amount equal to 200% of the product of the maximum annual debt service on the Bonds
proposed to be issued times a fraction the numerator of which is the aggregate Maximum
Special Taxes in the then current fiscal year applicable to the land within the Community
Facilities District owned by the Account Party and the denominator of which is the total
Maximum Special Tax applicable to all land in the Community Facilities District in such fiscal
year (the "Stated Amount"). The Security shall be maintained by the Account Party in each
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fiscal year until terminated in accordance with Section 2.2(c) below. While the Security is still
required, the Stated Amount of such Security shall be reduced as set forth in a "Certificate of
Reduction or Termination" (as defined in Section 2.2(c) below).
The Security shall name the City, or its designee, as a beneficiary and shall provide that
the City, or its designee, may draw an amount equal to any delinquencies in payment of
semiannual installments of the Special Taxes levied on property owned by the Account Party in
the Community Facilities District. The total amount to be drawn under the Security shall not
exceed an amount equal to the Special Taxes owed by the Account Party with respect to
property within the Community Facilities District that is delinquent at the time the draw is made.
The amount drawn on the Security shall be applied in the same manner and for the same
purposes as the delinquent Special Taxes would have been applied; provided, however the
payment of a draw under the Security will not be deemed to cure the delinquency in payment of
the Special Taxes.
If, subsequent to a draw on the Security and prior to the satisfaction of any
reimbursements due to the institution providing the Security (the "Security Provider") pursuant to
this Agreement, the City receives payment of all or a portion of the delinquent Special Taxes or
the proceeds of a sale of delinquent real property pursuant to foreclosure proceedings
("Delinquency Proceeds") for a parcel for which the Security has been drawn, the Security
Provider shall be reimbursed for such draws to the extent of Delinquency Proceeds net of the
City's costs of collection, provided that the Security is or has been concurrently reinstated to, or
a Substitute Security (as defined below) provided for, the then applicable Stated Amount. The
Security Provider is intended by the Parties to be a third party beneficiary of this Section 2.2.
(b) The Security shall be renewed, or a substitute Security reasonably satisfactory to
the City (a "Substitute Security") provided, not less than thirty (30) calendar days prior to the
expiration of the Security or Substitute Security then in effect. If the Account Party provides a
Substitute Security to the City, then the City or its designee, shall return any existing Security on
the effective date of the Substitute Security to the Security Provider.
If the Security is not renewed within thirty (30) days prior to its expiration date and the
requirements for release or termination of the Security as set forth in Section 2.2(c) below have
not then been met, the full amount of the Security may be drawn by the City and deposited in an
account established under the Indenture (as hereinafter defined) or in such account established
with a financial institution selected by the City. Thereafter, amounts in such account shall be
held as security, and if Special Taxes owed by the Account Party with respect to property within
the Community Facilities District are not paid prior to delinquency, then such amounts in such
account may be applied by the City to pay the delinquent Special Taxes owed by the Account
Party with respect to such property on the same terms and conditions applicable hereunder to
draws on the Security.
At such time as the Security is renewed, or a Substitute Security is accepted by the City,
or the requirement for the Security has been terminated pursuant to this section, the City or its
designee, shall release all amounts in the Security account to the Security Provider within ten
(10) calendar days from the date of renewal or acceptance.
(c) Following the sale or transfer by the Account Party of any property to a person
other than the Account Party, or upon the prepayment of the Special Tax obligation for a parcel
owned by the Account Party, the Account Party shall notify the Community Facilities District of
such event, in writing, and, if requested by the Account Party, the Stated Amount of the Security
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shall be reduced and be recalculated in accordance with this Section 2.2; provided, however,
that any costs associated with the recalculation and reduction shall be borne by the Account
Party. Subject to Section 2.2(d) below, the Stated Amount may be reduced to an amount equal
to 200% of the product of the maximum annual debt service on the outstanding Bonds times a
fraction the numerator of which is the aggregate Maximum Special Tax applicable to the land
within the Community Facilities District owned by the Account Party and the denominator of
which is the total Maximum Special Tax to all land in the Community Facilities District as of June
1 of the year of calculation. The Security shall be terminated when (i) the Account Party has
paid all Special Taxes in the current fiscal year and the property owned by the Account Party in
the Community Facilities District is expected to be responsible for less than 20% of the
Maximum Special Tax in the next fiscal year.
Reduction or termination of a Security shall occur automatically upon submission to the
Security Provider by the City of a "Certificate of Reduction or Termination." The City shall
deliver to the Security Provider, such Certificate of Reduction or Termination promptly upon
receiving from the Account Party a certification which shall be made under penalty of perjury
and which shall indicate (i) the legal description of all land owned by the Account Party, and
either (ii) a recalculation of the new Stated Amount that the Account Party proposes be
applicable to the Security or (iii) if termination of the Security is requested, a statement that one
of the requirements set forth in the preceding paragraph for termination of the Security has been
satisfied.
The Account Party shall notify the City of any events that will result in a reduction of the
Stated Amount of the Security and shall provide the City with verification of said events. The
Account Party may provide the City with a Substitute Security in the reduced amount, and the
City shall release and return to the Security Provider the Security then in effect. The Parties
expressly acknowledge that the Account Party's failure to so notify the City or to reduce the
Security at the times prescribed herein shall in no way effect or invalidate sale or transfer of
property, or recordation of maps on property.
(d) If property is sold or transferred by an Account Party with the result that the land
owned by the transferee or any of its affiliates ("Transferee") is responsible 20% or more of the
aggregate Maximum Special Tax authorized to be levied in the Community Facilities District, a
Security on the same terms specified in Section 2.2(a) above will be furnished by Transferee
with respect to all land owned by such Transferee in the Community Facilities District. Any
applicable purchase and sale agreement and/or escrow instructions shall notify the Transferee
of this Security requirement and obligate the Transferee to provide such Security, if applicable.
The Security of the Account Party will not be reduced to reflect the sale or transfer of land until a
Security is furnished by the Transferee and accepted by the City. The issuing financial
institution and the form and terms of said Security will be subject to reasonable prior approval by
the City. All terms provided in this Section 2.2 are applicable to the Transferee by replacing the
term "Account Party" at each place where it occurs in each section with the term "Transferee."
Each provider of a Security for a Transferee shall be an express third party beneficiary of the
provisions of this Section 2.2.
Any costs related to the holding or maintaining the Security, including any fees of a fiscal
agent, trustee or other depository shall be borne by the Account Party.
2.3 Malor Landowner Initial and Continuing Disclosure. An owner of land which is
responsible for twenty percent (20%) or more of the Special Tax in the fiscal year in which the
Bonds are issued or in the fiscal year following the fiscal year in which the Bonds are issued (a
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"Major Landowner") will be required to provide all information regarding the development of its
property, including the financing plan for such development, which is necessary to ensure that
the official statement for such Bonds complies with the requirements of Rule 15c2-12 of the
Securities and Exchange Commission (the "Rule") and all other applicable federal and state
securities laws. Additionally, Developer acknowledges that, if it is a Major Landowner at the
time of issuance of the Bonds, it will be necessary that Developer enter into a continuing
disclosure agreement to provide such continuing disclosure pertaining to the development of the
land owned by Developer within the CFD as necessary to assist the underwriter in complying
with the continuing disclosure requirements of the Rule and/or to assist in the marketing of the
Bonds.
2.4 Bond Issuance Parameters. The terms and conditions upon which each series of
the Bonds shall be issued and sold, the method of sale of the Bonds and the pricing of the
Bonds shall be determined solely by the City in its reasonable discretion in conformance with
the requirements of Government Code Section 53313.5, the Act, the Policy, and this
Agreement. The Bonds shall be issued with a term not to exceed 35 years from the date of
issuance of the Bonds, or such longer term as is then permitted by law. The proceeds of the
Bonds shall be used in the following priority to (1) fund a reserve fund for the payment of
principal and interest with respect to the Bonds in an amount equal to the least of (i) ten percent
(10%) of the total bond issue, (ii) maximum annual debt service on Bonds, or (iii) 125% of
average annual debt service; (2) fund capitalized interest through the interest payment date on
the Bonds for which Special Taxes are not available for payment of debt service on the Bonds;
(3) reimburse the Developer or its designee pursuant to Section 1 hereof for CFD formation
costs which have not already been reimbursed to the Developer from collected Special Tax;
(4) pay for costs of issuance of the Bonds including, without limitation, underwriter's discount,
bond counsel and disclosure counsel fees, appraisal and special tax consultant fees, printing,
and fiscal agent fees; (5) pay for the costs of forming the Community Facilities District, and
(6) pay for the actual costs of the Improvements. The Community Facilities District shall
maintain records relating to the disbursements of proceeds of the sale of the Bonds. The
Indenture or Resolution (hereinafter "Indenture") for the Bonds shall establish an acquisition and
construction fund or improvement fund (herein, the "Improvement Fund") into which shall be
deposited initially the proceeds of the Bonds net of the amount of proceeds required to fund
items (1) through (5) in the second preceding sentence. The Indenture shall also establish
separate accounts of the Improvement Fund designated the "City Improvements Account," "City
Fee Facility Improvements Account," and any Miscellaneous Improvement Account(s) for the
Miscellaneous Improvements described in Exhibit "E" if applicable, into which shall be
deposited such portions of the Improvement Fund as agreed by the Parties and directed by the
City in writing at or subsequent to the closing of the sale of the Bonds consistent with the
following priorities:
(a) Amounts determined by the City to be reimbursed to the Developer in
accordance with the Reimbursement Agreement for the advance of the costs of formation of the
Community Facilities District,
(b) An amount sufficient to fund the reasonable, current estimated cost of the
City Fee Facility Improvements anticipated to be funded out of the Bonds being issued shall be
deposited in the City Fee Facility Improvements Account (any Special Taxes levied in the CFD
and collected by the CFD remaining after the payment of administrative expenses of the CFD
and the reimbursement of the Developer for CFD formation costs pursuant to Section 1 hereof
shall be deposited into the City Fee Facility Improvements Account at the time of Bond
issuance, unless otherwise directed in writing by the Developer),
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(c) If applicable, an amount to be agreed upon between Developer and the
CFD prior to the issuance of Bonds sufficient to fund the reasonable, current estimated costs of
the City Improvements shall be deposited, or later transferred, to the City Improvements
Account; and
(d) If applicable, an amount to be agreed upon between Developer and the
CFD prior to the issuance of Bonds sufficient to fund the reasonable, current estimated cost of
any Miscellaneous Improvements, if any, described in Exhibit "E" hereto, anticipated to be
funded out of the Bonds being issued shall be deposited, or later transferred, to the applicable
Miscellaneous Improvement Account(s).
Interest earned on moneys deposited in each of the City Fee Facility Improvements
Account, the City Improvements Account and the Miscellaneous Improvement Account(s) shall
remain in such accounts until such time as all of the Improvements have been funded.
Additionally, the Developer may direct the CFD to transfer excess moneys in any of the City Fee
Facility Improvements Account, the City Improvements Account or the Miscellaneous
Improvement Account(s) to another Account. The Indenture shall provide that amounts
remaining in the Improvement Fund after funding all proposed Improvements or sooner, as
agreed by the City and the Developer, shall be deposited in the special tax fund or bond service
fund and be applied to pay debt service on the Bonds and/or to call Bonds in advance of
maturity.
SECTION 3. ALLOCATION OF SPECIAL TAXES
Prior to the issuance of Bonds, the City Council of the City, acting as the legislative body
of the Community Facilities District, may levy Special Taxes on all parcels classified as
Developed Property pursuant to the Rate and Method. Such Special Taxes collected by the
City shall first be applied to fund annual administrative expenses of the Community Facilities
District and then to fund Improvements in the same manner as the proceeds of Bonds as set
forth herein. Upon sale and delivery of the Bonds, the City shall annually levy the Special Tax
as provided for in documents pursuant to which the Bonds were issued. Following the issuance
of the Bonds, the City shall have no obligation to levy Special Taxes to reimburse the Developer
for the costs of any Improvements not paid for from Bond proceeds. The entire amount of any
Special Tax levied by the Community Facilities District to repay the Bonds and recover costs
and expenses allowable pursuant to Government Code Section 53313.5, shall be allocated to
the Community Facilities District.
SECTION 4. NOTICE OF SPECIAL TAX
Developer, or Developer's successors or assigns, shall provide written notice to all
potential initial purchasers of lots advising of the special tax obligation applicable to the
Developer Property in the form required by Section 53341.5 of the Government Code. A
sample copy as prepared by Developer is attached as Exhibit "C."
SECTION 5. DESIGN PLANS AND SPECIFICATIONS
The requirements of this Section shall not apply to any City Improvement that was
complete (as determined by the City Council) prior to the adoption by the City Council of the
resolution forming the CFD, but they shall apply to all other City Improvements. All plans,
specifications and bid documents for the City Improvements ("Plans") constructed or to be
constructed by the Developer shall be prepared by the Developer at the Developer's initial
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expense, subject to approval by the applicable public agency. Costs for preparation of the
Plans will be eligible for reimbursement, conditioned upon the final approval of the applicable
public agency and the availability of funds. Reimbursement of costs for plan revisions will be
considered on a case by case basis. All facilities shall be bid in accordance with "public works"
requirements of Section 6.4 to be eligible for reimbursement. The Developer shall not award
bids for construction, or commence or cause commencement of construction, of a City
Improvement until the Plans and bidding documents have been approved by the City. The bid
opening for City Improvements shall be coordinated with and take place at the City's facilities,
with City personnel in attendance.
SECTION 6. CONSTRUCTION OF IMPROVEMENTS
The requirements of this Section shall not apply to any City Improvement that was
complete (as determined by the City Council) prior to the adoption by the City Council of the
resolution forming the CFD, but they shall apply to all other City Improvements.
6.1 Construction or Acquisition Election. Upon the approval of Plans for a City
Improvement, the Developer and the City shall determine whether the Developer will provide for
construction of such City Improvement in accordance with Sections 6.2, 6.4 and 7 of this
Agreement (the "Acquisition Election") or whether the City will provide for construction of such
City Improvement in accordance with Section 6.3 of this Agreement (the "Construction
Election"). Sections 6.2, 6.4 and 7 specify the requirements for construction of the City
Improvements pursuant to the Acquisition Election that the City believes are necessary to
ensure that such City Improvements are constructed as if they had been constructed under the
direction and supervision, or under the authority of the City.
6.2 Acquisition Election. If the Acquisition Election is selected with respect to City
Improvements in accordance with the provisions of Section 7 hereof, a qualified engineering
firm (the "Field Engineer") shall be employed by the Developer to provide all field engineering
surveys determined to be necessary by the City's inspection personnel. Field Engineer shall
promptly furnish to City a complete set of grade sheets listing all locations, offsets, etc., in
accordance with good engineering practices, and attendant data and reports resulting from Field
Engineer's engineering surveys and/or proposed facility design changes. City shall have the
right, but not the obligation, to review, evaluate and analyze whether such results comply with
applicable specifications.
A full-time soil-testing firm, approved by City, shall be employed by the Developer to
conduct soil compaction testing and certification. The Developer shall promptly furnish results
of all such compaction testing to the City for its review, evaluation and decision as to
compliance with applicable specifications. In the event the compaction is not in compliance with
applicable specifications, the Developer shall be fully liable and responsible for the costs of
achieving compliance. A final report certifying all required compaction in accordance with the
specifications shall be a condition of final acceptance of facilities.
The costs of all surveying, testing and reports associated with the City Improvements
furnished and constructed by the Developer's contractor(s) shall be eligible to be paid from
funds in the City Improvements Account.
The City shall not be responsible for conducting any environmental, archaeological,
biological, or cultural studies or any mitigation requirements that may be requested by
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appropriate Federal, State, and/or local agencies. Any such work shall be paid for and
conducted by the Developer and reimbursed out of the City Improvements Account.
Notwithstanding the selection of the Acquisition Election with respect to a City
Improvement, should the Developer notify the City that the Developer is unable to complete
such City Improvement, the City shall have the right but not the obligation to require the
Developer to make an irrevocable offer of dedication to the City of the land owned by the
Developer for the City Improvement identified in the notice and to assume responsibility for the
work to be performed thereunder. In the event the City elects to assume the responsibility for
any work on a previously awarded contract as described in the preceding sentence, the
following will occur: (i) the Developer will make an irrevocable offer of dedication to the City of
the land owned by the Developer for such City Improvement identified in the notice; (ii) to the
extent permitted by law and the applicable contract, the Developer will assign all of the contracts
for the work performed to date on the City Improvement identified in the notice to the City, if
requested to do so by the City Manager; the City will use its best efforts to complete the City
Improvement within a reasonable time frame, and upon completion of the City Improvement, to
the extent there are Special Taxes or proceeds of the Bonds available following payment to the
City for the costs of completing such City Improvement, the Developer will be reimbursed for the
lesser of the cost or value of the previously unreimbursed satisfactory work performed or paid
for by the Developer. The cost of such work will be determined by taking the unreimbursed
amounts expended by the Developer under the contract(s) taken over by the City and deducting
any incremental cost incurred by the City to complete the work under the contracts in question.
Incremental cost shall be costs in excess of the sum of the original contract cost plus change
orders approved by the City.
6.3 Construction Election. The Developer and the City shall agree on which
Improvements shall be constructed by the Developer and which shall be constructed by the
City. If the Construction Election is selected, upon the award of a construction contract for a
City Improvement to be constructed by the City, funds in the City Improvements Account in an
amount equal to the costs of the City Improvement, shall be reserved for payments under such
contract and shall not be available for the funding of other City Improvements until all payments
required by such contract have been made. At the time of either or both (i) the execution of a
contract for the construction of a City Improvement as to which the Construction Election has
been made, and (ii) completion of construction of the City Improvement, the Developer shall be
entitled to reimbursement from funds in the City Improvements Account of any actual costs of
the City Improvements incurred by the Developer at that time.
If Bonds have not been issued or insufficient funds are reserved in the Improvement
Fund, the City agrees to accept advances of funds from the Developer (if the Developer agrees
to make such advances in its sole discretion) upon the City's award of a construction contract
for a City Improvement to be constructed by the City in an amount equal to the difference
between the amount of reserved funds and the contract amount. The amount of such advances
shall be reimbursed to the Developer to the extent of funds in the City Improvements Account.
PUBLIC WORKS REQUIREMENTS
6.4 City Requirements. In order that the City Improvements as to which the
Acquisition Election is made may be properly and readily acquired by the City, the Developer
shall comply with all of the following requirements with respect to any such City Improvements
to be acquired with funds in the City Improvements Account, and the Developer shall provide
such proof to the City as the City may reasonably require and at such intervals and in such form
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as the City may reasonably require, that the following requirements have been satisfied as to all
such City Improvements:
(a) The Developer shall prepare a bid package for review, comment and
approval by the City Manager of the City or his designee (the "City Representative").
(b) The Developer shall, after obtaining sealed bids for the construction of the
City Improvements in conformance with the procedures and requirements of the City, submit to
the City written evidence of such competitive bidding procedure, including evidence of the
means by which bids were solicited, a listing of all responsive bids and their amounts, and the
name or names of the contractor or contractors to whom the Developer proposes to award the
contracts for such construction, which shall be the lowest responsible bidder.
(c) The City Representative shall attend the bid opening. If unable to attend
the bid opening, the City Representative shall approve or disapprove of a contractor or
contractors, in writing, within five (5) business days after receipt from the Developer of the name
or names of such contractor or contractors recommended by the Developer. If the City
Representative disapproves of any such contractor; the Developer shall select the next lowest
responsible bidder from the competitive bids received who is acceptable to the City
Representative.
(d) The specifications and bid and contract documents shall require all such
contractors to pay prevailing wages and to otherwise comply with applicable provisions of the
Labor Code, the Government Code and the Public Contract Code relating to public works
projects and as required by the procedures and standards of the City with respect to the
construction of its public works projects.
(e) The Developer shall submit faithful performance and payment bonds in
form and substance reasonably acceptable to the City with respect to the City Improvements for
which the Acquisition Election is made.
(f) The Developer and its contractor and subcontractors shall be required to
provide proof of insurance coverage throughout the term of the construction of the City
Improvements, which they will construct in conformance with the City's standard procedures
and requirements. The City's insurance requirements are set out in Section 20 herein.
(g) The Developer and all such contractors shall comply with such other
requirements relating to the construction of the City Improvements which the City may impose
by written notification delivered to the Developer and each such contractor at the time either
prior to the receipt of bids by the Developer for the construction of such City Improvements or,
to the extent required as a result of changes in applicable laws, during the progress of
construction thereof; provided that such other requirements shall only be imposed to the extent
the City reasonably determines they are required in order to comply with applicable law. In
accordance with Section 7, the Developer shall be deemed the awarding body and shall be
solely responsible for compliance and enforcement of the provisions of the Labor Code,
Government Code, and Public Contract Code.
(h) A "Change Order" is an order from the Developer to a contractor
authorizing a change in the work to be performed. The Developer shall receive comments from
the City Representative prior to the Developer's approval of any Change Order. The City
Representative shall comment on or deny the Change Order request within five (5) business
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days of receipt of all necessary information. The City's comments to a Change Order shall not
be unreasonably delayed, conditioned or withheld. The Developer shall not be entitled to be
compensated for costs associated with a "Change Order" that has not been approved by the
City Representative.
Developer shall provide proof to the City, at such intervals and in such form as the City
may reasonably require, that the foregoing requirements have been satisfied as to all of the City
Improvements as to which the Acquisition Election has been made which are funded through
Bond proceeds.
SECTION 7. INSPECTION; COMPLETION OF CONSTRUCTION
The requirements of this Section shall not apply to any City Improvement that was
complete (as determined by the City Council) prior to the adoption by the City Council of the
resolution forming the CFD, but they shall apply to all other City Improvements.
The City shall have primary responsibility for inspecting the City Improvements to assure
that the work is being accomplished in accordance with the Plans. Such inspection does not
include inspection for compliance with safety requirements by the Developer's contractor(s).
The City's personnel shall be granted access to each construction site at all reasonable times
for the purpose of accomplishing such inspection. Upon satisfaction of the City's inspectors, the
Developer shall notify the City in writing that a City Improvement has been completed in
accordance with the Plans. Any actual costs reasonably incurred by the City for inspection not
previously paid by the Developer shall be reimbursed from funds in the City Improvements
Account.
Within three (3) business days of receipt of written notification from City inspectors that a
City Improvement has been completed in accordance with the Plans, the City Representative
shall notify the Developer in writing that such City Improvement has been satisfactorily
completed. Upon receiving such notification, the Developer shall file a Notice of Completion
with the County of Riverside Recorders Office, pursuant to the provisions of Section 3093 of the
Civil Code. The Developer shall furnish to the City a duplicate copy of each such Notice of
Completion showing thereon the date of filing with the County of Riverside (the "County"). City
will in turn file a notice with the County for acceptance.
SECTION 8. LIENS
With respect to any City Improvement that was complete (as determined by the City
Council) prior to the adoption by the City Council of the resolution forming the CFD, prior to any
payment by the CFD to the Developer for such City Improvement, the Developer shall provide to
the City such evidence or proof as the City shall require that all persons, firms and corporations
supplying work, labor, materials, supplies and equipment for the construction of the City
Improvements have been paid, and that no claims of liens have been recorded by or on behalf
of any such person, firm or corporation. With respect to City Improvements, upon the earlier of
(i) receipt of all applicable lien releases, or (ii) expiration of the time for the recording of claim of
liens as prescribed by Sections 3115 and 3116 of the Civil Code, the Developer shall provide to
the City such evidence or proof as the City shall require that all persons, firms and corporations
supplying work, labor, materials, supplies and equipment for the construction of the City
Improvements have been paid, and that no claims of liens have been recorded by or on behalf
of any such person, firm or corporation.
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SECTION 9. ACQUISITION; ACQUISITION PRICE; SOURCE OF FUNDS
The acquisition price of a City Improvement that was complete (as determined by the
City Council) prior to the adoption by the City Council of the resolution forming the CFD shall be
its fair market value, as determined by the City's Assistant General Manager or his or her
designee, as of the date of acquisition. The City shall consider input and data provided by the
Developer prior to determining the final fair market value.
The costs eligible to be included in the acquisition price of a City Improvement that is not
described in the preceding paragraph (the "Actual Costs") shall include:
(i) The actual hard costs for the construction of such City Improvement as
established by the City-approved construction contracts and approved
Change Orders, including costs of payment, performance and
maintenance bonds and insurance costs, pursuant to this Agreement;
(ii) The design and engineering costs of such City Improvement including,
without limitation, the costs incurred in preparing the Plans. Costs for plan
revisions will be considered on a case by case basis;
(iii) The costs of environmental evaluations and public agency permits and
approvals attributable to the City Improvement;
(iv) Costs incurred by the Developer for construction management and
supervision of such City Improvement, not to exceed five percent (5%) of
the actual construction cost, subject to prior approval by the City of any
construction management or supervision contract with respect to a City
Improvement;
(v) Professional costs associated with the City Improvement such as
engineering, inspection, construction staking, materials, testing and
similar professional services; and
(vi) Costs approved by the City in accordance with the Act of acquiring any
real property or interests therein required for the City Improvement
including, without limitation, any water tank sites, temporary construction
easements, temporary by-pass road and maintenance easements.
Provided the Developer has complied with the requirements of this Agreement, the City
agrees to pay the acquisition price of a completed City Improvement to the Developer or its
designee within thirty (30) days after the Developer's satisfaction of the preconditions to such
payment stated herein, but only to the extent there are sufficient funds available in the City
Improvements Account. Except in the case of a City Improvement described in the first
paragraph of this Section, the acquisition price to be paid from Bond proceeds for the
acquisition of a City Improvement by the City shall be the least of (1) the value of the City
Improvement; or (2) the total of the Actual Costs of the City Improvement.
As a condition to the payment of the acquisition price, the ownership of the completed
City Improvement shall be transferred to the City by grant deed, bill of sale or such other
documentation as such public agency may require free and clear of all taxes, liens,
encumbrances, and assessments, but subject to any exceptions determined by the City to not
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interfere with the actual or intended use of the land or interest therein (including the lien of a
community facilities district so long as the subject property is exempt from taxation or is
otherwise not taxable by such community facilities district). Upon the transfer of ownership of
City Improvements or any portion thereof to the City, the City shall be responsible for the
maintenance of such City Improvements or the portion transferred. Notwithstanding the
foregoing, the acquisition price of a City Improvement may be paid prior to transfer of ownership
and acceptance of the City Improvement if it is substantially completed at the time of payment.
The City Improvement shall be considered "substantially complete" when it has been reasonably
determined by the City to be usable, subject to final completion of such items as the final lift or
any other items not essential to the primary use or operation of the City Improvement.
For purposes of determining the acquisition price to be paid by the Community Facilities
District for the acquisition of the City Improvements by the City (other than City Improvements
described in the first paragraph of this Section), the value of such City Improvements shall
include the construction costs specified in the City-approved contracts and City-approved
Change Orders conforming to Section 6, as hereinbefore specified. City approval is a condition
prior to initiation of contract work. However, if the City reasonably determines that the additional
Actual Costs are excessive and that the value of the City Improvements is less than the total
amount of such Actual Costs and such construction costs, the price to be paid for the acquisition
of the City Improvements shall be the value thereof as determined by the Engineer, subject,
however, to the Developer's right to appeal to the City's City Council.
Upon completion of the construction of a City Improvement, the Developer shall deliver
or cause to be delivered to the City a Disbursement Request Form in substantially the form of
Exhibit "D," attached hereto, copies of the contract(s) with the contractor(s) who have
constructed the City Improvement and other relevant documentation with regard to the
payments made to such contractor(s) and each of them for the construction of the City
Improvement, documentation evidencing payment of prevailing wages, and shall also provide to
the City invoices and purchase orders with respect to all equipment, materials and labor
purchased for the construction of the City Improvements. The City shall require the Engineer to
complete its determination of the value of the City Improvements as promptly as is reasonably
possible.
Notwithstanding the preceding provisions of this Section, the source of funds for the
acquisition of the City Improvements or any portion thereof shall be funds in the City
Improvements Account. If for any reason beyond the City's control the Bonds are not sold, the
City shall not be required to acquire the City Improvements from the Developer, except to the
extent of funds from the collection of Special Taxes. In such event, the Developer shall
complete the design and construction and offer to the City ownership of such portions of the City
Improvements as are required to be constructed by the Developer as a condition to recordation
of subdivision maps for the Developer Property (but only at such times as required by such
condition), but need not construct any portion of the City Improvements which it is not so
required to construct. Reimbursement for these facilities would be made from the collection of
Special Taxes.
In addition to the foregoing, the City shall have the right to withhold payment for
acquisition of a City Improvement, if:
(a) the Developer or any of its affiliates is delinquent in the payment of any
Special Taxes levied by the Community Facilities District on properties then owned by the
Developer or any of its affiliates within the CFD, or
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(b) the Developer is not then in substantial compliance with a condition or
obligation imposed upon the Developer Property by the City, including but not limited to,
payment of all applicable fees, dedication of all applicable rights-of-way or other property and
construction requirements.
The City shall immediately provide written notice to the Developer of the decision to
withhold any such payment and shall specify the reason for such decision. If the payment is
withheld as a result of the delinquency in the payment of Special Taxes, the notice shall identify
the delinquent parcels and the amount of such delinquency. If the payment is withheld as a
result of substantial non-compliance with a condition or obligation, the notice shall specify such
condition or obligation and what action will be necessary by the Developer to substantially
comply with such condition or obligation. Upon receipt of evidence reasonably satisfactory to
the City that the Developer has paid the delinquent Special Taxes or complied with the subject
condition or obligation, the City shall forthwith make all payments which have been withheld
pursuant to the provisions of this Section.
SECTION 10. EASEMENTS AND/OR FEE TITLE OWNERSHIP DEEDS
Without limiting the Developer's rights to reimbursement for such grants pursuant to
Section 9 above, the Developer shall, at the time the City acquires the City Improvements as
provided in Section 9 hereof, grant or cause to be granted to the City, by appropriate
instruments prescribed by the City, all easements across private property and/or fee title
ownership deeds which may be reasonably necessary for the proper operation and
maintenance of such City Improvements, or any part thereof, but only to the extent located
within the Developer Property.
SECTION 11. PERMITS
The Developer shall be responsible for obtaining all necessary construction permits from
the City and/or the County (as appropriate) covering construction and installation of the City
Improvement as to which the Acquisition Election has been made. The City will request the
County to issue an "operate and maintain permit" to the City, which will become effective upon
the completion of the City Improvements and acceptance of ownership therewith by the City.
SECTION 12. MAINTENANCE
Prior to the transfer of ownership of a City Improvement by the Developer to the City, as
provided in Section 9 hereof, the Developer shall be responsible for the maintenance thereof
and shall require its contractor(s) to repair all facilities damaged by any party other than the City,
prior to acceptance by the City and/or make corrections determined to be necessary by the
City's inspection personnel. The City shall not be permitted to place any City Improvement in
service prior to acceptance of the same, unless the Developer otherwise consents in writing.
SECTION 13. INSPECTION OF RECORDS
The City shall have the right to review all books and records of the Developer pertaining
to the costs and expenses incurred by the Developer for the design and construction of the City
Improvements during normal business hours by making arrangements with the Developer. The
Developer shall have the right to review all books and records of the City pertaining to costs and
expenses incurred by the City for services of the Engineer by making arrangements with the
City.
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SECTION 14. OWNERSHIP OF IMPROVEMENTS
Notwithstanding the fact that some or all of the City Improvements may be constructed in
dedicated street rights-of-way or on property which has been or will be dedicated to the City,
each City Improvement shall be and remain the property of the Developer until acquired by the
City as provided in this Agreement.
SECTION 15. MATERIALS AND WORKMANSHIP WARRANTY
The requirements of this Section shall not apply to any City Improvement that was
complete (as determined by the City Council) prior to the adoption by the City Council of the
resolution forming the CFD, but they shall apply to all other City Improvements.
Upon the completion of the acquisition of a City Improvement by the City, the
performance bond related to such individual City Improvement provided by the Developer
pursuant to Section 6.4(e) hereof, shall be reduced by 90%, and the remaining 10% shall serve
as a maintenance bond to guarantee that such City Improvement will be free from defects due
to faulty workmanship or materials for a period of one year.
SECTION 16. CITY FEE FACILITY IMPROVEMENTS
The Developer may be required pursuant to the conditions of development or the fee
ordinance to pay certain City fees (the "City Fees") relating to the City Fee Facility
Improvements prior to the availability of proceeds of the Bonds to pay for such City Fee Facility
Improvements. In the event such City Fees are paid prior to the availability of Bond proceeds,
the amounts paid to the City shall be deemed to be deposits (each a "Deposit') that are subject
to refund by the City to the Developer in accordance with this Agreement. The City shall place
each Deposit in a capital facilities account(s). If the Developer has made any Deposits to the
City, then following deposit of Bond proceeds in the City Fee Facility Improvements Account,
the City shall return to the Developer, from the capital account in which the Deposits were
deposited the Deposits not previously returned, without interest or other earnings thereon. The
City shall be so obligated to return such Deposits only to the extent that an equivalent amount of
the Deposits to be returned is deposited in the City Fee Facility Improvements Account from
Bond proceeds or Special Tax collections prior to the issuance of Bonds.
Bond proceeds used to finance City Improvements which relate to the City Fees shall be
allocated first for return of all Deposits prior to being allocated to the payment of City Fees not
previously deposited by the Developer. Any Deposits that have not been returned to the
Developer at the time it is determined that there will be no further Bond proceeds available (i.e.
the final series of Bonds to finance the Improvements have been issued) shall be retained by
the City and may be used for the purposes for which the City Fee was required, and the
unrefunded Deposits shall constitute full and final payment for such City Fees, without any
increase of any kind.
SECTION 17. MISCELLANEOUS IMPROVEMENTS.
Improvements unrelated to the City Improvements and the City Fee Facility
Improvements, if applicable, will be supplemented by the terms contained in an addendum
which will appear as Exhibit "E" hereto. The amounts deposited in the applicable
Miscellaneous Improvement Account(s), if any, will be disbursed for the acquisition or
construction of Miscellaneous Improvements in accordance with the provisions in the applicable
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Joint Community Facilities Agreement, if any. Any amounts in the applicable Miscellaneous
Improvement Account(s) shall be disbursed at the written direction of the City upon Developer's
submittal of an addendum which will appear as the applicable entity's Certificate and the
Disbursement Request Form provided for in the Joint Community Facilities Agreement. Upon
receipt of the Disbursement Request Form, the City shall submit a written requisition for
payment of the requested amount to the trustee for the Bonds, who shall directly pay the
amount requested to the applicable entity.
SECTION 18. INDEPENDENT CONTRACTOR
In performing this Agreement, Developer is an independent contractor and not the agent
of the City. The City shall not have any responsibility for payment to any contractor or supplier
of Developer. It is not intended by the Parties that this Agreement create a partnership or joint
venture among them and this Agreement shall not otherwise be construed.
SECTION 19. INDEMNIFICATION
Developer shall assume the defense of, indemnify and save harmless, the City, its
officers, employees and agents, and the Community Facilities District, its officers, employees
and agents, from and against all actions, damages, claims, losses or expenses of every type
and description to which they may be subject or put, by reason of, or resulting from such
person's or entity's performance of its obligations under this Agreement, the issuance of the
Bonds and the construction of the City Improvements and the Miscellaneous Improvements
(provided, however, that such indemnification shall not apply to any City Improvement that the
City constructs itself pursuant to Section 6.3 of this Agreement), the failure of the Developer to
provide notice of the Special Tax to be levied by the Community Facilities District pursuant to
Section 53341.5 of the Act (but only if the Developer is required by law to provide such notice),
or arising out of any alleged misstatements of fact or alleged omission of a material fact made
by the Developer, its officers, directors, employees or agents to the City, the Community
Facilities District, the underwriter of the Bonds and its counsel, the appraiser, the special tax
consultant, the market absorption consultant or bond counsel regarding the Developer, its
proposed developments, its property ownership, and any contractual arrangement it may enter
into in a disclosure document describing the Community Facilities District and the risks relating
to the Bonds. No provision of this Agreement shall in any way limit the extent of Developer's
responsibility for payment of damages resulting from the operations of Developer and its
contractors; provided, however that Developer shall not be required to assume the defense or
indemnify and save harmless any person or entity as to actions, damages, claims, losses or
expenses resulting from the breach of this Agreement, the negligence or willful misconduct of
such person or entity or their officers, agents, consultants or employees.
SECTION 20. INSURANCE REQUIREMENTS
Neither the Developer nor its contractor shall commence work on a City Improvement
under this Agreement prior to obtaining insurance with a company or companies acceptable to
the City, nor shall the Developer's contractor allow any subcontractor to commence work on its
subcontract until all insurance required of the subcontractor has been obtained.
The Developer shall, during the life of this Agreement, notify the City in writing of any
incident giving rise to any potential bodily injury or property damage claim and any resultant
settlements, whether in conjunction with this or any other project which may affect the limits of
the required coverage, as soon as is reasonable and practical.
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SECTION 21. CONFLICT WITH OTHER AGREEMENTS
Except as specifically provided herein, nothing contained herein shall be construed as
releasing Developer from any condition of development or requirement imposed by any other
agreement with City. In the event of a conflicting provision, such other agreement shall prevail
unless such conflicting provision is specifically waived or modified in writing by City.
SECTION 22. TERMINATION
The provisions of this Agreement related to the acquisition and financing of the
Improvements shall terminate and be of no further force or effect if the first series of Bonds for
the CFD are not sold within ten years from the date of this Agreement unless extended by
agreement of all the Parties. If the City is unable to sell the first series of Bonds for the CFD
after diligent, commercially reasonable efforts to do so, this Agreement shall terminate and be of
no further force and effect; provided, however, in such event, any collected Special Taxes
remaining after the payment of administrative expenses of the CFD and reimbursement to the
Developer of CFD formation costs shall be used to pay for Facilities in accordance with this
Agreement and Developer shall receive a credit against City Fees otherwise payable to City in
the amount so used to pay for City Fee Facility Improvements.
SECTION 23. NOTICES
Any notice, payment or instrument required or permitted by this Agreement to be given
or delivered to either Party shall be deemed to have been received when personally delivered or
seventy-two (72) hours following deposit of the same in any United States Post Office in
California, registered or certified, postage prepaid. Any notice to the Community Facilities
District or the City shall be addressed to City of Menifee, 29844 Haun Road, Menifee, CA
92530, Attention: Deputy City Manager. Any notice to Developer shall be addressed to
Meritage Homes of California, Inc., 5 Peters Canyon Road, Suite 310, Attention Lester Tucker.
Each Party may change its address for delivery of notice by delivering written notice of
such change of address to the other Party hereto.
SECTION 24. NO GIFT OR WAIVER.
24.1 No Gift or Waiver for City Improvements. The Developer and the City
acknowledge that:
(a) The Developer or its predecessor may have constructed or may be
constructing City Improvements before funds that will be used to acquire them are available with
the expectation that the Developer will be reimbursed for such City Improvements to the extent
and in the manner set forth in this Agreement.
(b) The City may inspect City Improvements and process Disbursement
Request Forms even if funds from the proceeds of Bonds available at the time of such
inspection and processing do not exist or are not then sufficient to satisfy the Disbursement
Request in full.
(c) The Developer may convey City Improvements to the City and the City
may accept such City Improvements even if funds from the proceeds of Bonds available at the
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time of such conveyance and acceptance do not exist or are not then sufficient to satisfy the
Disbursement Request in full.
(d) If the City accepts City Improvements before a Disbursement Request is
paid in full, the unpaid balance of the Disbursement Request will be paid from time to time, in
any number of installments and irrespective of the length of time payment is deferred, as funds
from the proceeds of Bonds become available.
(e) The Developer's conveyance or dedication of City Improvements to the
City before the availability of funds from the proceeds of Bonds to acquire the City
Improvements is not, and shall not be deemed, a gift or a waiver of the Developer's right to
payment of the purchase price of such City Improvements pursuant to this Agreement.
24.2 No Gift or Waiver for City Fees. The Developer and the City acknowledge that:
(a) Prior to the availability of funds from the proceeds of Bonds, the
Developer or its predecessor may have been or may be required to deposit funds to assure
payment of applicable City Fees of the City.
(b) The Developer or its predecessor has deposited or will be depositing
such funds with the expectation that the Developer will be reimbursed for these Deposits to the
extent and in the manner set forth in this Agreement.
(c) The reimbursement of such Deposits pursuant to Section 16 of this
Agreement may occur from time to time, in any number of installments and irrespective of the
length of time payment is deferred, as funds become available.
(d) The Developer's deposit of such funds to the City before the availability of
funds to reimburse the Developer is not, and shall not be deemed, a gift or a waiver of the
Developer's right to reimbursement of such Deposits pursuant to this Agreement.
SECTION 25. GENERAL PROVISIONS
(a) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the City and the Developer and their respective heirs, executors, legal
representatives, successors, and authorized assigns.
(b) Amendment. This Agreement may be amended at any time but only in
writing signed by each Party hereto.
(c) Entire Agreement. This Agreement, and the agreements referenced
herein, contains the entire understanding and agreement between the Parties with respect to
the matters provided for herein and supersedes all prior agreements and negotiations between
the Parties with respect to the subject matter of this Agreement. There are no oral or written
representations, understanding, undertakings or agreements which are not contained or
expressly referred to herein, and any such representations, understandings or agreements are
superseded by this Agreement. Failure by a Party to insist upon the strict performance of any of
the provisions of this Agreement by the other Parties hereto, or the failure by a Party to exercise
its rights upon the default of another Party, shall not constitute a waiver of such Party's right to
insist and demand strict compliance by such other Parties with the terms of this Agreement
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thereafter This Agreement shall be binding upon, and enforceable by and against the
Community Facilities District upon the establishment of the Community Facilities District.
(d) Exhibits. All exhibits attached hereto are incorporated into this
Agreement by reference.
(e) Severability. If any part of this Agreement is held to be illegal or
unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be
given effect to the fullest extent reasonably possible.
(f) Waiver. Failure by a Party to insist upon the strict performance of any of
the provisions of this Agreement by the other Parties hereto, or the failure by a Party to exercise
its rights upon the default of another Party, shall not constitute a waiver of such Party's right to
insist and demand strict compliance by such other Parties with the terms of this Agreement
thereafter.
(g) No Third Party Beneficiaries. Except as provided explicitly in this
Agreement, no person or entity shall be deemed to be a third party beneficiary hereof, and
nothing in this Agreement (either express or implied) is intended to confer upon any person or
entity, other than the City, the Community Facilities District, and Developer (and their respective
successors and assigns), any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
(h) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which shall constitute but one instrument.
(i) Assignment. Developer may assign all or any of its rights pursuant to this
Agreement to a purchaser of all or any portion of the Developer Property. Such a purchaser
and assignee shall, as a condition to taking an assignment of such rights, enter into an
assignment and assumption agreement with the City and Developer, in a form reasonably
acceptable to Developer and the City, whereby such rights assigned are specified and such
purchaser agrees, except as may be otherwise specifically provided therein, to assume the
obligations of Developer pursuant to this Agreement and to be bound thereby. A company that
acquires all of the assets of the Developer, including ownership of the Developer itself, shall be
deemed a successor and shall not require an assignment or assumption agreement to be bound
by, and enjoy the benefits of, this Agreement.
Q) Governing Law. This Agreement and any dispute arising hereunder shall
be governed by and interpreted in accordance with the laws of the State of California.
(k) Construction of Agreement. This Agreement has been reviewed by legal
counsel for both the City and Developer and shall be deemed for all purposes to have been
jointly drafted by the City and Developer. No presumption or rule that ambiguities shall be
construed against the drafting Party shall apply to the interpretation or enforcement of this
Agreement.
(1) Attorneys' Fees. In the event of any action or proceeding, including an
arbitration or a reference pursuant to Section 638, et seq., of the Code of Civil Procedure
brought by any Party against any other under this Agreement, the prevailing Party shall be
entitled to recover its actual attorneys' fees and all fees, costs and expenses incurred for
prosecution, defense, consultation, or advice in such action or proceeding. In addition to the
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foregoing, the prevailing Party shall be entitled to its actual attorneys' fees and all fees, costs
and expenses incurred in any post-judgment proceedings to collect or enforce the judgment.
This provision is separate and several and shall survive the merger of this Agreement into any
judgment on this Agreement.
(m) Venue and Forum. Any action at law or in equity arising under this
Agreement brought by any Party hereto for the purpose of enforcing, construing or determining
the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the
County of Riverside, State of California, and the Parties waive all provisions of law providing for
the filing, removal or change of venue to any other Court.
10
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4818-3150-9673v3/200299-0002
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and
year written below.
Dated: November 6, 2019 CITY OF MENIFEE, a political subdivision of the
State of California
By:
City Manager
ATTEST: ARMANDO G. VILLA
CITY MANAGER
CITY OF MENIFEE
By: Q- _�Ijf
ara anwaring, City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY OF THE CITY OF MENIFEE
By. —
Jeff,; T . AIching, CiCiey
[SIGNATURES CONTINUED ON NEXT PAGE.]
S-1
4818-3150-9673v3/200299-0002
[SIGNATURE PAGE CONTINUED]
MERITAGE HOMES OF CALIFORNIA, INC., a
California corporation, record owner of the Property
By:
Lester Tucker, Vice President of Forward
Planning
S-2
4818-3150-9673v3/200299-0002
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EXHIBIT A
DESCRIPTION OF DEVELOPER PROPERTY
Real property in the City of Menifee, County of Riverside, State of California, described as
follows:
Assessor Parcel No. (as set forth in the County of Riverside Assessor's Fiscal Year
2018-19 Roll): 360-210-001-1
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4818-3150-9673v3/200299-0002
EXHIBIT B
DESCRIPTION OF COST ESTIMATES OF THE IMPROVEMENTS
The Improvements consist of the City Fee Facility Improvements and the City
Improvements, as described below. Any other types of Improvements will be described in an
addendum to this Agreement appearing as Exhibit "E."
I. CITY FEE FACILITY IMPROVEMENTS.
City facilities included in the City's development fee programs used to finance expansion
projects, exclusive of in-tract facilities constructed by a property owner, but including and not
limited to the following:
Estimated Cost of the City Fee Facility Improvements
Description Estimated Cost
Law Enforcement $ 15,015
Fire Facilities 39,910
Circulation 303,550
Storm Drainage 148,590
General Government 66,365
Public Use Facilities 10,010
Parks— Land Acquisition 13,975
Parks — Improvements 42,965
City Projects 128,076
Fair Share Traffic Impact Fee 22,200
Total City Fees Facility Improvements $ 790,656
ll. CITY IMPROVEMENTS.
Those facilities constructed by or on behalf of the Developer and needed by City in order
to provide services to the Developer Property and also include any of the following:
Estimated Cost of the City Improvements
Description Estimated Cost
Offsite Storm Drain — Holland Rd. $ 133,015
Offsite Concrete— Holland Rd. 28,208
Offsite Concrete — Bradley Rd. 61,614
Offsite Paving — Holland Rd. 75,736
Offsite Paving — Bradley Rd. 165,721
Offsite Landscaping — Holland Rd. 65,738
Offsite Landscaping — Bradley Rd. 81,653
Total City Improvements $ 611,685
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4818-3150-9673v3/200299-0002
EXHIBIT C
NOTICE OF SPECIAL TAX
(as prepared by Developer)
NOTICE OF SPECIAL TAX
COMMUNITY FACILITIES DISTRICT NO. 2019-1 (MEADOW RUN)
OF THE CITY OF MENIFEE
COUNTY OF RIVERSIDE, CALIFORNIA
TO: THE PROSPECTIVE PURCHASER OF THE REAL PROPERTY KNOWN AS:
TRACT NO. 37576, LOT NO.
THIS IS A NOTIFICATION TO YOU PRIOR TO YOUR ENTERING INTO A CONTRACT
TO PURCHASE THE PROPERTY. THE SELLER IS REQUIRED TO GIVE YOU THIS NOTICE
AND TO OBTAIN A COPY SIGNED BY YOU TO INDICATE THAT YOU HAVE RECEIVED
AND READ A COPY OF THIS NOTICE.
(1) This property is subject to a special tax, which is in addition to the regular
property taxes and any other charges, fees, special taxes, and benefit assessments on the
Property. It is imposed on this property because it is a new development, and may not be
imposed generally upon property outside of this new development. If you fail to pay this tax
when due each year, the property may be foreclosed upon and sold. The tax is used to
provide public facilities or services that are likely to particularly benefit the Property. YOU
SHOULD TAKE THIS TAX AND THE BENEFITS FROM THE FACILITIES AND SERVICES
FOR WHICH IT PAYS INTO ACCOUNT IN DECIDING WHETHER TO BUY THIS
PROPERTY.
(2) The property you are purchasing (the "Property") is within the boundaries of the
City of Menifee Community Facilities District No. 2019-1 (Meadow Run) (the "CFD") and is
subject to annual special taxes levied against the Property pursuant to the Rate and Method
of Apportionment of Special Tax for the CFD (the "RMA"). Pursuant to the RMA, the
maximum special tax which may be levied against the Property will depend on whether the
Property is classified as "Developed Property," "Approved Property", or "Undeveloped
Property." Pursuant to the RMA, Developed Property is defined, in pertinent parts, as "...all
Assessor's Parcels...included in a Final Map that was recorded prior to the January 1st
preceding the Fiscal Year in which the Special Tax is being levied, and...[for which] a
Building Permit for new construction was issued on or before May 1st preceding the Fiscal
Year in which the Special Tax is being levied." Approved Property is defined, in pertinent
parts, as "all Assessor's Parcels...that are included in a Final Map that was recorded prior to
the January 1st preceding the Fiscal Year in which the Special Tax is being levied...and that
have not been issued a building permit on or before May 1st preceding the Fiscal Year in
which the Special Tax is being levied." Undeveloped Property is defined, in pertinent parts,
as "all Assessor's Parcels of Taxable Property which are not Developed Property or
Approved Property...."
Undeveloped Property
If the Property is classified as Undeveloped Property, the maximum special tax that may
be levied against the Property in tax year 2020-2021 shall be $17,031 per Acre. Each tax
year the maximum special tax for Undeveloped Property shall increase by an amount equal
to 2.00% of the maximum special tax in effect for the prior tax year.
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4818-3150-9673v 3/2002 99-0002
Approved Property:
If the Property is classified as Approved Property in tax year 2020-2021, the maximum
special tax that may be levied against the Property in tax year 2020-2021 shall be the
"Backup Special Tax", which the seller of the Property has calculated to be approximately
$2,979. In the event it is necessary to levy the Backup Special Tax against the Property, the
CFD Administrator will independently calculate the Backup Special Tax pursuant to the
methodology set forth in Section C.1.b. of the RMA. It is possible that the CFD
Administrator's calculation of the Backup Special Tax may be more or less than the seller's
calculation. Each tax year the maximum special tax for Approved Property shall increase
annually by an amount equal to 2.00% of the maximum special tax in effect for the prior tax
year.
Developed Property:
If the Property is classified as Developed Property, the maximum special tax which may
be levied against the Property in tax year 2020-2021 is the greater of (i) the "Assigned
Special Tax" which applies to the Property, based on the size of the dwelling unit
constructed on the Property, as set forth in Table 1 of the RMA, which is reproduced in
pertinent parts below, or (ii) the Backup Special Tax which is $2,979 per Assessor's Parcel
as detailed in Section D.1.c of the RMA.
Table 1
Assigned Special Tax Rates
Assigned Special
Tax Per Taxable
Land Use Category Building Square Footage Unit
1. Single Family Residential Property Less than 2,000 sq. ft. $2,516.00
2. Single Family Residential Property 2,000 sq. ft. to 2,300 sq. ft. $2,557.00
3. Single Family Residential Property 2,301 sq. ft. to 2,600 sq. ft. $2,638.00
4. Single Family Residential Property 2,601 sq. ft. to 2,900 sq. ft. $2,714.00
5. Single Family Residential Property Greater than 2,900 sq. ft. $2,843.00
Each tax year the maximum special tax for Developed Property shall increase annually by
an amount equal to 2.00% of the maximum special tax in effect for the prior tax year.
The special tax will be levied each year until all of the authorized facilities are built and all special
tax bonds are repaid, but in any case not after the 2059-60 tax year.
The special tax secured by this lien is authorized to be levied for the purpose of the
construction, purchase, modification, expansion, rehabilitation and/or improvement of (i)
drainage, library, park, roadway, traffic, administration and general government facilities animal
shelter facilities, fire and safety, and other public facilities of the City, including the foregoing
public facilities which are included in the City's fee programs with respect to such facilities and
authorized to be financed under the Mello-Roos Community Facilities Act of 1982,as amended
(the "City Facilities"); (ii) water and sewer facilities including the acquisition of capacity in the
sewer system and/or water system of Eastern Municipal Water District which are included in
Eastern Municipal Water District's water and sewer capacity and connection fee programs (the
"Water District Facilities"), and (iii) interim and permanent school facilities of Menifee Union
School District, including classrooms, multi-purpose facilities, administration and auxiliary space
at school facilities, athletic fields, playgrounds and recreational facilities and improvements
C-2
4818-3150-9673v3/200299-0002
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EXHIBIT D
CITY OF MENIFEE
CFD NO. 2019-1 (MEADOW RUN)
DISBURSEMENT REQUEST FORM
1. Community Facilities District No. 2019-1 of City of Menifee (Meadow Run) (the
"CFD") is hereby requested to pay from the Account, or any
applicable account or sub-account thereof, established by the CFD in connection with its 20
Special Tax Bonds (the "Bonds") to City of Menifee (the "City") as payee, the sum set forth
below:
$ (the Requested Amount")
2. The Requested Amount represents the payment of City Fees for lot(s) within
the boundaries of the CFD (the "Property").
(Tract No. , Lot Nos. ).
Or, City Improvements as supported by attached documentation.
3. The Requested Amount is due and payable, has not formed the basis of any
prior request or disbursement.
4. The City, as payee, is hereby directing payment of the Requested Amount be
payable to Meritage Homes of California, Inc., a California limited company (the "Developer"),
pursuant to the wiring instructions attached hereto.
5. The Requested Amount is authorized and payable pursuant to the terms of the
certain Acquisition, Construction and Funding Agreement (the "Agreement") between the City of
Menifee, acting for and on behalf of itself and the CFD and Developer.
6. Capitalized undefined terms used herein shall have the meaning ascribed to
them in the Agreement.
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4818-3150-9673v3/200299-0002
Dated: DEVELOPER:
MERITAGE HOMES OF CALIFORNIA, INC., a
California corporation
By:
Name:
Title: Authorized Representative
Dated: CITY OF MENIFEE
By:
Its:
[ATTACH WIRING INSTRUCTIONS]
D-2
4818-3150-9673v3/200299-0002
EXHIBIT E
ADDENDUM
DESCRIPTION OF THE MISCELLANEOUS IMPROVEMENT
The construction, purchase, modification, expansion, rehabilitation and/or improvement
of (i) water and sewer facilities including the acquisition of capacity in the sewer system and/or
water system of Eastern Municipal Water District which are included in Eastern Municipal Water
District's water and sewer capacity and connection fee programs (the "Water District Facilities"),
and (ii) interim and permanent school facilities of Menifee Union School District, including
classrooms, multi-purpose facilities, administration and auxiliary space at school facilities,
athletic fields, playgrounds and recreational facilities and improvements thereto, landscaping,
access roadways, drainage, sidewalks and gutters and utility lines, furniture, equipment and
technology, including technology upgrades and mobile devices and infrastructure therefore, with
a useful life of at least five (5) years, including such facilities which are included in Menifee
Union School District's school fee programs (the `School Facilities" and together, with the Water
Facilities, the "Facilities"), and all appurtenances and appurtenant work in connection with the
foregoing Facilities, including the cost of engineering, planning, designing, materials testing,
coordination, construction staking, construction management and supervision for such Facilities.
Water District facilities included in the Water District's capacity and connection fee
programs used to finance expansion projects, exclusive of in-tract facilities constructed by a
property owner, but including and not limited to the following:
Estimated Cost of the Water District Fee Facility Improvements
Description Estimated Cost
Sewer Financial Participation Charge $ 184,795
Sewer Treatment Plant Capacity Charge 376,545
Water Financial Participation Charge 348,855
Water Supply Development Fee 19,500
1" Meter Drop-In Fee 24,505
Total Water District Fee Facilities $ 954,200
Those facilities constructed by or on behalf of the Developer and needed by the Water
District in order to provide services to the Developer Property and also include any of the
following:
Estimated Cost of the Water District Facility Improvements
Description Estimated Cost
Onsite Sewer Improvements $ 149,550
Offsite Sewer— Holland Rd. 59,531
Onsite Water Improvement 261,650
Offsite Water Improvements — Holland Rd. 34,975
Offsite Water Improvements — Bradley Rd. 33,610
Total Water District Facilities $ 539,316
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4818-3150-9673v3/200299-0002
School District facilities included in the School District's development fee programs used
to finance School District Facilities, in approximately the following amount:
Estimated Cost of the School District Improvements
Description Estimated Cost
Estimated School Fees $ 520,573
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4818-3150-9673v3/200299-0002