11.2_Agreement_-_CFD_2020-2_JCFA_with_EMWD124/031858-0001
14867917.1 a08/03/20
#195554 v2 9167.5
JOINT COMMUNITY FACILITIES AGREEMENT
relating to
Community Facilities District No. 2020-2 of the City of Menifee (Del Oro)
by and among
City of Menifee, Eastern Municipal Water District and
Strata Holland, LLC
THIS JOINT COMMUNITY FACILITIES AGREEMENT (the “Agreement”) is entered
into effective as of the 19th day of August, 2020, by and among CITY OF MENIFEE, a California
general law city (the “City”), EASTERN MUNICIPAL WATER DISTRICT, a public agency
organized and existing pursuant to Division 20 of the California Water Code (“EMWD”), and
STRATA HOLLAND, LLC, a Delaware limited liability company (“Property Owner”), and
relates to the formation by the City of a community facilities district known as “Community
Facilities District No. 2020-2 of the City of Menifee (Del Oro)” (the “CFD”) for the purpose of
financing certain facilities to be owned, operated or maintained by the City or EMWD from
proceeds of bonds issued by the CFD and the proceeds of special taxes levied by the CFD.
R E C I T A L S:
A. The property (“Property”) depicted in Exhibit “A” hereto, which is located in the
City, County of Riverside, State of California, constitutes the land within the boundaries of the
CFD.
B. Property Owner owns the Property included in the CFD. Property Owner intends
to develop the Property for residential purposes. The Property is described in Exhibit “B” hereto.
C. The City received a petition in accordance with the Act (defined below) to form the
CFD for the purpose of financing, among other things, certain public facilities to be constructed
and owned and operated by EMWD (the “EMWD Facilities”) in lieu of the payment of EMWD
Fees (defined herein) and certain water and sewer facilities to be constructed by Property Owner
and acquired by EMWD (the “Acquisition Facilities”).
D. In conjunction with the issuance of permits for the construction of homes on the
Property and/or receipt of water meters for such homes, the Property Owner, or its successors or
assigns, may elect to advance EMWD Facilities costs in lieu of payment of EMWD Fees (the
“Advances”) before Bond Proceeds (defined herein) are available in sufficient amounts to pay for
EMWD Facilities. In such case, the Property Owner shall be entitled to (i) reimbursement of such
Advances limited to Bond Proceeds available to EMWD, if any (the Advances being considered
an interest free loan by the Property Owner with no repayment obligation except to the extent there
are Bond Proceeds received by or made available to EMWD as described herein, all as further
described in Section 5(a) below), and (ii) credit against EMWD Fees which would otherwise be
due to EMWD equal to the amount of Bond Proceeds disbursed to EMWD or at the direction of
EMWD for EMWD Facilities, all as further described herein.
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -2-
#195554 v2 9167.5
E. The City will have sole discretion and responsibility for the formation and
administration of the CFD.
F. The City is authorized by Section 53313.5 of the Act to assist in the financing of
the acquisition and/or construction of the EMWD Facilities and/or the Acquisition Facilities. This
Agreement constitutes a joint community facilities agreement, within the meaning of
Section 53316.2 of the Act, by and among EMWD, the Property Owner and the City, pursuant to
which the CFD, when and if formed, will be authorized to finance the acquisition and/or
construction of all or a portion of the EMWD Facilities and/or the Acquisition Facilities. As
authorized by Section 53316.6 of the Act, responsibility for constructing, providing for and
operating the EMWD Facilities and/or the Acquisition Facilities is delegated to EMWD.
G. The Parties (defined below) hereto find and determine that the residents residing
within the boundaries of EMWD, the City and the CFD will be benefited by the construction and/or
acquisition of the EMWD Facilities and/or the Acquisition Facilities and that this Agreement is
beneficial to the interests of such residents.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the
Parties hereto agree as follows:
1. Recitals. Each of the above recitals is incorporated herein and is true and correct.
2. Definitions. Unless the context clearly otherwise requires, the terms defined in this
Section shall, for all purposes of this Agreement, have the meanings herein specified.
(a) “Acquisition Facility(ies)” means the sewer and water facilities described
as such in Exhibit “C” hereto.
(b) “Act” means the Mello-Roos Community Facilities Act of 1982,
Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California
Government Code.
(c) “Advance” or “Advances” means an amount advanced by Property Owner
to EMWD for EMWD Facilities in lieu of payment of EMWD Fees prior to the availability of
sufficient Bond Proceeds. Advances shall be deemed payment of EMWD Fees to the extent
sufficient Bond Proceeds are not received by or made available to EMWD.
(d) “Bond Proceeds” or “Proceeds of the Bonds” shall mean those net funds
generated by the sale of the Bonds and investment earnings thereon, net of costs of issuance,
reserve fund, capitalized interest and administrative expenses, and may include net funds generated
by the levy of Special Taxes and investment earnings thereon.
(e) “Bond Resolution” means that Resolution, Resolution Supplement, Fiscal
Agent Agreement, Indenture of Trust or other equivalent document(s) providing for the issuance
of the Bonds.
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -3-
#195554 v2 9167.5
(f) “Bonds” shall mean those bonds, or other securities, issued by, or on behalf
of the CFD, in one or more series, as authorized by the qualified electors within the CFD.
(g) “Disbursement Request” means a request for payment relating to EMWD
Facilities in the form attached hereto as Exhibit “D.”
(h) “EMWD Engineer Representative” means an EMWD engineer duly
authorized to act on behalf of EMWD or his or her designee.
(i) “EMWD Fees” means water supply development fees, water backup fees,
sewer backup fees, sewer treatment capacity charges and all components thereof imposed by
EMWD upon the Property to finance EMWD Facilities.
(j) “EMWD Facilities” means those sewer and water facilities listed on Exhibit
“C” hereto, which are necessary for the provision of water and sewer services to the Property and
paid for with Bond Proceeds in lieu of the payment of EMWD Fees.
(k) “Other Facilities Account of the Improvement Fund” means the fund,
account or subaccount of the CFD (regardless of its designation within the Bond Resolution) into
which a portion of the Bond Proceeds may be deposited in accordance with the Bond Resolution
to finance EMWD Facilities and/or the Acquisition Facilities and which may have subaccounts.
(l) “Party” or “Parties” shall mean any one or all of the parties to this
Agreement.
(m) “Payment Request” means a request for payment relating to Acquisition
Facilities in the form attached hereto as Exhibit “E”.
(n) “Rate and Method” means the Rate and Method of Apportionment of the
Special Tax authorizing the levy and collection of Special Taxes pursuant to proceedings
undertaken for the formation of the CFD pursuant to the Act.
(o) “Special Taxes” means the special taxes authorized to be levied and
collected within the CFD pursuant to the Rate and Method.
(p) “State” means the State of California.
3. Formation of the CFD. The City has undertaken to analyze the appropriateness of
forming the CFD to finance the EMWD Facilities, Acquisition Facilities, and other facilities. The
City has and will retain, at the expense of the Property Owner, the necessary consultants to analyze
the formation of the CFD.
4. Sale of Bonds and Use of Bond Proceeds. In the event that the CFD is formed and
Bonds are issued, the City and the Property Owner shall determine the amount of Bond Proceeds
to be deposited in the Other Facilities Account of the Improvement Fund and each subaccount
thereof. As Bond Proceeds are transferred to EMWD and reserved to fund EMWD Facilities, as
described in Section 5 below, the Property Owner shall receive a credit in the amount transferred
against the payment of EMWD Fees with respect to the Property. Nothing herein shall supersede
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -4-
#195554 v2 9167.5
the obligation of an owner of the Property to make an Advance or pay EMWD Fees to EMWD
when due. The purpose of this Agreement is to provide a mechanism by which the CFD may issue
the Bonds and levy Special Taxes to provide a source of funds to finance EMWD Facilities and
Acquisition Facilities in lieu of the payment of EMWD Fees and provision of Acquisition
Facilities. In the event that Bond Proceeds, including investment earnings thereon, are not
available or sufficient to satisfy the obligation of the Property for EMWD Fees, then the Property
Owner shall remain obligated to make an Advance for which it will receive no reimbursement
(except to the extent Bond Proceeds later become available to EMWD), or pay EMWD Fees to
EMWD as a condition of receiving water and sewer service to the Property.
The Bonds shall be issued only if, in its sole discretion, the City Council determines that
all requirements of State and federal law and all City policies have been satisfied or have been
waived by the City. Nothing in this Agreement shall confer upon EMWD or any owner of the
Property, including Property Owner, a right to compel the issuance of the Bonds or the
disbursement of Bond Proceeds to fund EMWD Facilities and/or Acquisition Facilities except in
accordance with the terms of this Agreement.
If and when the CFD determines to issue Bonds, the CFD shall take such actions necessary
in its reasonable discretion to ensure the total effective tax rate within the CFD does not exceed
two percent (2%) at the time of Bond sale. The total effective tax rate shall be based on a method
of determination of property values reasonably acceptable to the City. CFD shall not include
EMWD’s name on property owners’ special tax bills within the CFD.
By entering into this Agreement and requisitioning Bond Proceeds as described herein,
EMWD is not passing upon, determining or assuming the tax-exempt status of the Bonds for
federal or California state income tax purposes.
5. Disbursements for EMWD Facilities.
(a) Upon the funding of the Other Facilities Account of the Improvement Fund
with funds reserved to fund EMWD Facilities, the Property Owner shall notify EMWD of the
amount of Bond Proceeds reserved to fund EMWD Facilities and the Property Owner and EMWD
may execute and submit a Disbursement Request for payment to the City or the CFD requesting
disbursement of an amount equal to all or a portion of Advances from the Other Facilities Account
of the Improvement Fund to the extent that Bond Proceeds are available in the Other Facilities
Account of the Improvement Fund for such purpose. Upon EMWD’s receipt of funds pursuant to
such Disbursement Request, the Property Owner shall receive reimbursement of the Advances
from EMWD. To facilitate EMWD’s bookkeeping, EMWD may direct in a Disbursement
Request, that all or a portion of a payment be made directly from the Other Facilities Account to
the Property Owner as reimbursement for Advances made by the Property Owner. In the event of
a reimbursement to the Property Owner pursuant to the preceding sentence, EMWD shall account
for an equivalent amount of Advances previously received from the Property Owner in accordance
with Section 5(c) below.
To the extent that EMWD expends all or a portion of an Advance pending the deposit of
Bond Proceeds in the Other Facilities Account of the Improvement Fund, for purposes of Treasury
Regulations regarding investment and expenditure of Bond Proceeds and State law provisions
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -5-
#195554 v2 9167.5
regarding financing of public capital facilities, the Advance shall be a considered an interest free
loan by the Property Owner, which EMWD only agrees to repay to the extent of the deposit, if
any, of Bond Proceeds in the Other Facilities Account of the Improvement Fund and EMWD’s
written direction as described below to pay all or a portion of such deposit to the Property Owner
as repayment of an Advance.
(b) From time to time following the funding of the Other Facilities Account of
the Improvement Fund, the Property Owner may notify EMWD in writing and the Property Owner
and EMWD may jointly request a disbursement from the Other Facilities Account of the
Improvement Fund to fund EMWD Facilities by executing and submitting a Disbursement
Request. Upon receipt of such Disbursement Request completed in accordance with the terms of
this Agreement, the CFD shall wire transfer or otherwise pay to EMWD (or upon EMWD’s written
direction pay to the Property Owner or an EMWD contractor) such requested funds to the extent
that Bond Proceeds are available in the Other Facilities Account of the Improvement Fund for such
purpose. Upon such notice and EMWD’s receipt of such disbursement (or upon payment to the
Property Owner or an EMWD contractor in accordance with directions from EMWD relating to
EMWD Facilities), the Property Owner shall be deemed to have satisfied the applicable EMWD
Fees with respect to the number of dwelling units or lots for which the EMWD Fees would
otherwise have been required in an amount equal to such disbursement.
(c) EMWD agrees that prior to submitting a Disbursement Request requesting
payment from the CFD it shall review and approve all costs included in its request and will have
already paid or incurred such costs of EMWD Facilities from its own funds (which may include
Advances from the Property Owner) subsequent to the date of this Agreement, or will disburse
such amounts to pay the costs of EMWD Facilities following receipt of funds from the CFD. In
the event that EMWD does not disburse any Bond Proceeds (or equivalent amount of Advances
repaid pursuant to the second to the last sentence of the first paragraph of Section 5(a) above)
received by it to third parties within five banking days of receipt, it will trace and report to the
CFD all earnings, if any, earned by EMWD, from the date of receipt of such Bond Proceeds by
EMWD (or the date of disbursement pursuant to the second to the last sentence of the first
paragraph of Section 5(a) above) to the date of expenditure by EMWD for capital costs of the
EMWD Facilities. Such report shall be delivered at least semiannually until all Bond Proceeds are
expended by EMWD. EMWD agrees that in processing the above disbursements it will comply
with all legal requirements for the expenditure of Bond Proceeds under the Internal Revenue Code
of 1986 and any amendments thereto.
(d) EMWD agrees to maintain adequate internal controls over its payment
function and to maintain accounting records in accordance with generally accepted accounting
procedures. EMWD will, upon request, provide the City and/or the Property Owner with access
to EMWD’s records related to the EMWD Facilities and expenditure of Advances and will provide
to the City its annual financial report certified by an independent certified public accountant for
purposes of assisting the City in calculating the arbitrage rebate obligation of the CFD, if any.
(e) The City or the CFD agrees to maintain full and accurate records of all
amounts, and investment earnings, if any, expended from the Other Facilities Account of the
Improvement Fund and expenditure of Advances. The City or the CFD will, upon request, provide
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -6-
#195554 v2 9167.5
EMWD and/or Property Owner with access to the City’s or the CFD’s records related to the Other
Facilities Account of the Improvement Fund.
(f) As a condition to disbursement of any proceeds of the Bonds from the Other
Facilities Account pursuant to this Agreement, EMWD agrees that it shall provide to the CFD, a
certificate confirming the representations contained in Section 5 hereof and such other matters as
the CFD may reasonably request upon which the CFD and its bond counsel may rely in connection
with the issuance of such Bonds and their conclusion that interest on such Bonds is not included
in gross income for federal income tax purposes.
6. Ownership of EMWD Facilities and Acquisition Facilities. The EMWD Facilities
and Acquisition Facilities shall be and remain the property of EMWD.
7. Acquisition Facilities. The requirements of this Section 7 shall apply to any
Acquisition Facility for which a Payment Request is submitted to EMWD pursuant to this
Section 7.
(a) Design Plans and Specifications. All plans, specifications and bid
documents for the Acquisition Facility (“Plans”) constructed or to be constructed by the Property
Owner shall be prepared by the Property Owner at the Property Owner’s initial expense, subject
to approval by EMWD. Costs for preparation of the Plans shall be included in the acquisition
price. Reimbursement of costs for plan revisions will be considered on a case by case basis. The
Property Owner shall not award bids for construction, or commence or cause commencement of
construction, of the Acquisition Facility until the Plans and bidding documents have been approved
by EMWD. The bid opening for the Acquisition Facility shall be coordinated with and take place
at EMWD’s offices, with EMWD personnel in attendance.
(b) Construction of Acquisition Facilities. A qualified engineering firm (the
“Field Engineer”) shall be employed by the Property Owner to provide all field engineering
surveys determined to be necessary by the EMWD’s inspection personnel. Field Engineer shall
promptly furnish to EMWD 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. EMWD 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 EMWD, shall be employed by the Property
Owner to conduct soil compaction testing and certification. The Property Owner shall promptly
furnish results of all such compaction testing to EMWD 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 Property Owner shall be fully liable and responsible for the
costs of achieving compliance. A final report certifying all required compaction i n accordance
with the specifications shall be a condition of final acceptance of the Acquisition Facility.
The costs of all surveying, testing and reports associated with the Acquisition Facility
furnished and constructed by the Property Owner’s contractor(s) shall be included in the
acquisition price.
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -7-
#195554 v2 9167.5
EMWD shall not be responsible for conducting any environmental, archaeological,
biological, or cultural studies or any mitigation requirements that may be requested by appropriate
Federal, State, and/or local agencies with respect to the Acquisition Facility. Any such work shall
be paid for and conducted by the Property Owner and included in the acquisition price of the
Acquisition Facility.
(c) EMWD Public Works Requirements. In order that the Acquisition Facility
may be properly and readily acquired by EMWD, the Property Owner shall comply with all of the
following requirements with respect to the Acquisition Facility, and the Property Owner shall
provide such proof to the EMWD as EMWD may reasonably require and at such intervals and in
such form as EMWD may reasonably require, that the following requirements have been satisfied
as to the Acquisition Facility:
(i) The Property Owner shall prepare a bid package for review,
comment and approval by the General Manager of EMWD or his designee (the “EMWD
Representative”).
(ii) The Property Owner shall, after obtaining at least three sealed bids
for the construction of the Acquisition Facility in conformance with the procedures and
requirements of EMWD, submit to EMWD 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
Property Owner proposes to award the contracts for such construction, which shall be the lowest
responsible bidder.
(iii) The EMWD Representative shall attend the bid opening. If unable
to attend the bid opening, the EMWD Representative shall approve or disapprove of a contractor
or contractors, in writing, within five (5) business days after receipt from the Property Owner of
the name or names of such contractor or contractors recommended by the Property Owner. If the
EMWD Representative disapproves of any such contractor; the Property Owner shall select the
next lowest responsible bidder from the competitive bids received who is acceptable to the EMWD
Representative.
(iv) 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 EMWD with respect to the construction
of its public works projects.
(v) The Property Owner shall submit faithful performance and payment
bonds conforming in all respects to the requirements set forth in EMWD’s “Standard Water and/or
Sewer Facilities and Service Agreement.” The following documents shall be submitted to EMWD
along with the performance and payment bonds:
(A) The original, or a certified copy, of the unrevoked
appointment, power of attorney, bylaws, or other instrument entitling or authorizing the person
who executed the bond to do so;
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -8-
#195554 v2 9167.5
(B) A certified copy of the certificate of authority of the insurer
issued by the State of California’s Insurance Commissioner; and
(C) Copies of the insurer’s most recent annual and quarterly
statements filed with the Department of Insurance.
(vi) The Property Owner and its contractor and subcontractors shall be
required to provide proof of insurance coverage throughout the term of the construction of the
Acquisition Facility, which they will construct in conformance with EMWD’s standard procedures
and requirements. EMWD’s insurance requirements are set out in Section 7(n) herein.
(vii) The Property Owner and all such contractors shall comply with such
other requirements relating to the construction of the Acquisition Facility which EMWD may
impose by written notification delivered to the Property Owner and each such contractor at the
time either prior to the receipt of bids by the Property Owner for the construction of such
Acquisition Facility or, to the extent required as a result of changes in applicable laws, during the
progress of construction thereof. In accordance with Section 7(f), the Property Owner shall be
deemed the awarding body and shall be solely responsible for compliance and enforcement of the
provisions of the Labor Code, Government Code, and Public Contract Code.
(viii) A “Change Order” is an order from the Property Owner to a
contractor authorizing a change in the work to be performed. The Property Owner shall receive
comments from the EMWD Representative prior to the Property Owner’s approval of any Change
Order. The EMWD Representative shall comment on or deny the Change Order request wit hin
five (5) business days of receipt of all necessary information. EMWD’s comments to a Change
Order shall not be unreasonably delayed, conditioned or withheld. The Property Owner shall not
be entitled to include in the acquisition price costs associated with a Change Order that have not
been approved by the EMWD Representative.
(d) Inspection; Completion of Construction. EMWD shall have primary
responsibility for inspecting the Acquisition Facility 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 Property Owner’s contractor(s). EMWD’s personnel shall be granted
access to each construction site at all reasonable times for the purpose of accomplishing such
inspection. Upon satisfaction of EMWD’s inspectors, the Property Owner shall notify EMWD in
writing that an Acquisition Facility has been completed in accordance with the Plans.
Within three (3) business days of receipt of written notification from EMWD inspectors
that an Acquisition Facility has been completed in accordance with the Plans, the EMWD
Representative shall notify the Property Owner in writing that such Acquisition Facility has been
satisfactorily completed. Upon receiving such notification, the Property Owner shall file a Notice
of Completion with the County of Riverside Recorder’s Office, pursuant to the provisions of
Section 3093 of the Civil Code. The Property Owner shall furnish to EMWD a duplicate copy of
each such Notice of Completion showing thereon the date of filing with the County of Riverside
(the “County”). EMWD will in turn file a notice with the County for acceptance.
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -9-
#195554 v2 9167.5
(e) Liens. With respect to the Acquisition Facility, 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 Property Owner shall provide
to EMWD such evidence or proof as EMWD shall require that all persons, firms and corporations
supplying work, labor, materials, supplies and equipment for the construction of the Acquisition
Facility have been paid, and that no claims of liens have been recorded by or on behalf of any such
person, firm or corporation.
(f) Acquisition; Acquisition Price; Source of Funds. The costs eligible to be
included in the acquisition price of the Acquisition Facility (the “Actual Costs”) shall include:
(i) The actual hard costs for the construction of such Acquisition
Facility as established by EMWD-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 Acquisition Facility
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 Acquisition Facility;
(iv) Costs incurred by the Property Owner for construction management
and supervision of such Acquisition Facility, not to exceed five percent (5%) of the actual
construction cost, subject to prior approval by EMWD of any construction management or
supervision contract with respect to the Acquisition Facility;
(v) Professional costs associated with the Acquisition Facility such as
engineering, inspection, construction staking, materials, testing and similar professional services;
and
(vi) Costs approved by EMWD of acquiring from an unrelated third
party any real property or interests therein required for the Acquisition Facility including, without
limitation, temporary construction easements, temporary by-pass road and maintenance
easements.
Provided the Property Owner has complied with the requirements of this Agreement,
EMWD agrees to execute and submit to the City a Payment Request for payment of the acquisition
price of the completed Acquisition Facility to the Property Owner or its designee within thirty
(30) days after the Property Owner’s satisfaction of the preconditions to such payment stated
herein.
As a condition to EMWD’s execution of the Payment Request for the acquisition price, the
property ownership of the completed Acquisition Facility shall be transferred to EMWD by grant
deed, bill of sale or such other documentation as EMWD may require free and clear of all taxes,
liens, encumbrances, and assessments, but subject to any exceptions determined by EMWD to not
interfere with the actual or intended use of the land or interest therein (including the lien of a
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -10-
#195554 v2 9167.5
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 property ownership of the
Acquisition Facility or any portion thereof to EMWD, EMWD shall be responsible for the
maintenance of such Acquisition Facility or the portion transferred. Notwithstanding the
foregoing, the acquisition price of an Acquisition Facility may be paid prior to transfer of property
ownership and acceptance of the Acquisition Facility if it is substantially completed at the time of
payment. The Acquisition Facility shall be considered “substantially complete” when it has been
reasonably determined by EMWD 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 Acquisition Facility.
For purposes of determining the acquisition price to be paid by the CFD for the acquisition
of each Acquisition Facility by EMWD, the value of such Acquisition Facility shall include the
construction costs specified in EMWD-approved contracts and EMWD-approved change orders
conforming to this Section 7, as hereinbefore specified. EMWD approval is a condition prior to
initiation of contract work. However, if EMWD reasonably determines that the additional Actual
Costs are excessive and that the value of the Acquisition Facility is less than the total amount of
such Actual Costs and such construction costs, the price to be paid for the acquisition of the
Acquisition Facility shall be the value thereof as determined by the EMWD Engineer
Representative, subject, however, to the Property Owner’s right to appeal to EMWD’s Board of
Directors.
Upon completion of the construction of an Acquisition Facility, the Property Owner shall
deliver or cause to be delivered to EMWD a Payment Request in substantially the form of
Exhibit “E,” attached hereto, copies of the contract(s) with the contractor(s) who have constructed
the Acquisition Facility and other relevant documentation with regard to the payments made to
such contractor(s) and each of them for the construction of the Acquisition Facility, documentation
evidencing payment of prevailing wages, and shall also provide to EMWD invoices and purchase
orders with respect to all equipment, materials and labor purchased for the construction of the
Acquisition Facility. EMWD shall require the EMWD Engineer Representative to complete its
determination of the acquisition price of the Acquisition Facility as promptly as is reasonably
possible.
Notwithstanding the preceding provisions of this Section, the source of funds for the
acquisition of the Acquisition Facility or any portion thereof shall be funds on deposit in the Other
Facilities Account of the Improvement Fund. If no such funds are available, EMWD shall not be
required to acquire the Acquisition Facility from the Property Owner. In such event, the Property
Owner shall complete the design and construction and offer to EMWD property ownership of such
portions of the Acquisition Facility as are required to be constructed by the Property Owner as a
condition to recordation of subdivision maps for the Property, but need not construct any portion
of the Acquisition Facility which it is not so required to construct. Reimbursement for these
facilities would be made pursuant to the “Standard Water and/or Sewer Facilities and Service
Agreement(s)” by and between EMWD and the Property Owner.
(g) Easements and/or Fee Title Property Ownership Deeds. The Property
Owner shall, at the time EMWD acquires the Acquisition Facility as provided in Section 7(f)
hereof, grant or cause to be granted to EMWD, by appropriate instruments prescribed by EMWD,
all easements across private property and/or fee title property ownership deeds which may be
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -11-
#195554 v2 9167.5
reasonably necessary for the proper operation and maintenance of such Acquisition Facility, or
any part thereof.
(h) Permits. The Property Owner shall be responsible for obtaining all
necessary construction permits from the City covering construction and installation of the
Acquisition Facility. EMWD will request the City to issue an “operate and maintain permit” to
EMWD, which will become effective upon the completion of the Acquisition Facility and
acceptance of property ownership therewith by EMWD.
(i) Maintenance. Prior to the transfer of property ownership of an Acquisition
Facility by the Property Owner to EMWD, as provided in Section 7(f) hereof, the Property Owner
shall be responsible for the maintenance thereof and shall require its contractor(s) to repair all
facilities damaged by any party, prior to acceptance by EMWD and/or make corrections
determined to be necessary by EMWD’s inspection personnel.
(j) Inspection of Records. EMWD shall have the right to review all books and
records of the Property Owner pertaining to the costs and expenses incurred by the Property Owner
for the design and construction of the Acquisition Facility during normal business hours by making
arrangements with the Property Owner. The Property Owner shall have the right to review all
books and records of EMWD pertaining to costs and expenses incurred by EMWD for services of
the EMWD Engineer Representative by making arrangements with EMWD.
(k) Property Ownership of Improvements. Notwithstanding the fact that some
or all of the Acquisition Facility may be constructed in dedicated street rights -of-way or on
property which has been or will be dedicated to EMWD, each Acquisition Facility shall be and
remain the property of the Property Owner until acquired by EMWD as provided in this
Agreement.
(l) Materials and Workmanship Warranty. Upon the completion of the
acquisition of an Acquisition Facility by EMWD, the performance bond related to such individual
Acquisition Facility provided by the Property Owner pursuant to Section 7(c)(v) hereof, shall be
reduced by 90%, and the remaining 10% shall serve as a maintenance bond to guarantee that such
Acquisition Facility will be free from defects due to faulty workmanship or materials for a period
of one year. Release of performance and payment bonds is addressed in the Standard Water and/or
Sewer Facilities and Service Agreement, by and between EMWD and the Property Owner.
(m) Independent Contractor. In performing this Agreement with respect to the
Acquisition Facilities, the Property Owner is an independent contractor and not the agent of
EMWD. EMWD shall not have any responsibility for payment to any contractor, subcontractor
or supplier of the Property Owner. 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.
(n) Insurance Requirements. Neither the Property Owner nor its contractor
shall commence work on an Acquisition Facility under this Agreement prior to obtaining all
insurance required hereunder with a company or companies acceptable to EMWD, nor shall the
Property Owner’s contractor allow any subcontractor to commence work on its subcontract until
all insurance required of the subcontractor has been obtained.
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -12-
#195554 v2 9167.5
The Property Owner shall, during the life of this Agreement, notify EMWD 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.
Both the Property Owner and its contractor shall conform in every respect to the
requirements set forth in the Standard Water and/or Sewer Facilities and Service Agreement, by
and between EMWD and the Property Owner.
8. Indemnification.
(a) Indemnification by the City. The City shall assume the defense of,
indemnify and save harmless, EMWD, its officers, employees and agents, and each and every one
of them, from and against all actions, damages, claims, losses or expenses of every type and
description to which they may be subjected or put, by reason of, or resulting from, any act or
omission of the City with respect to this Agreement and the issuance of the Bonds; provided,
however, that the City shall not be required to indemnify any person or entity as to damages
resulting from negligence or willful misconduct of such person or entity or their officers, agents
or employees.
(b) Indemnification by Property Owner. Property Owner shall assume the
defense of, indemnify and save harmless, the City, the CFD, and EMWD, their respective officers,
employees and agents, and each and every one of them, from and against all actions, damages,
claims, losses or expenses of every type and description to which they may be subjected or put as
a result of or by reason of or arising out of or in consequence of any act or omission of Property
Owner with respect to this Agreement, the formation of the CFD, the use of Bond Proceeds or the
construction of the Acquisition Facilities; provided, however, that Property Owner shall not be
required to indemnify any person or entity as to damages resulting from gross negligence or willful
misconduct of such person or entity or their officers, agents, or employees.
(c) Indemnification by EMWD. EMWD shall assume the defense of, indemnify
and save harmless, the City, the CFD and their respective officers, employees and agents, and each
and every one of them, from and against all actions, damages, claims, losses or expenses of every
type and description to which they may be subjected or put, by reason of, or resulting from, any
act or omission of EMWD with respect to this Agreement, and the design, engineering and
construction of the EMWD Facilities and the Acquisition Facilities constructed by EMWD;
provided, however, that EMWD shall not be required to indemnify any person or entity as to
damages resulting from negligence or willful misconduct of such person or entity or their officers,
agents or employees.
9. Allocation of Special Taxes. The entire amount of any Special Taxes levied by the
CFD to repay Bonds, or to fund other obligations, shall be allocated to the CFD.
10. Amendment and Assignment. This Agreement may be amended at any time but
only in writing signed by each Party hereto. This Agreement may be assigned, in whole or in part,
by the Property Owner to the purchaser of any parcel of land within the Property, provided,
however, such assignment shall not be effective unless and until EMWD and the City have been
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -13-
#195554 v2 9167.5
notified, in writing, of such assignment and the assignment specifies whether the Property Owner
or such assignee is authorized to execute disbursement requests.
11. Entire Agreement. This Agreement contains the entire agreement between the
Parties with respect to the matters provided for herein and supersedes all prior agreements and
negotiations between the Parties with respect to the subject matter of this Agreement.
12. Notices. Any notice, payment or instrument required or permitted by this
Agreement to be given or delivered to either Party shall be deemed to have been received when
personally delivered or seventy-two hours following deposit of the same in any United States Post
Office in California, registered or certified, postage prepaid, addressed as follows:
City: City of Menifee
29844 Haun Road
Menifee, CA 92586
Attention: Deputy City Manager
EMWD: Eastern Municipal Water District
P.O. Box 8300
2270 Trumble Road
Perris, CA 92572-8300
Attention: Special Funding Division
Email: specialfundingdivision@emwd.org
Property Owner: Strata Holland, LLC
4370 La Jolla Village Drive, Suite 960
San Diego, CA 92122
Attention: Eric Flodine
Each Party may change its address for delivery of notice by delivering written notice of such
change of address to the other Parties hereto. Each such notice, statement, demand, consent,
approval, authorization, offer, designation, request or other communication hereunder shall be
deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon
delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier upon
the sender’s receipt of written acknowledgement from the addressee, (c) if given by registered or
certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72
hours after such notice is deposited with the United States mail, (d) if given by overnight courier,
with courier charges prepaid, 24 hours after delivery to said overnight courier, or if given by any
other means, upon delivery at the address specified in this Section.
13. Exhibits. All exhibits attached hereto are incorporated into this Agreement by
reference.
14. Attorney’s Fees. In the event of the bringing of any action or suit by any Party
against any other Party arising out of this Agreement, the Party in whose favor final judgment shall
be entered shall be entitled to recover from the losing Party all costs and expenses of suit, including
reasonable attorney’s fees.
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -14-
#195554 v2 9167.5
15. Interpretation in the event of Ambiguities or Disputes. The Parties acknowledge
and agree that each has been given the opportunity to review this Agreement with legal counsel
independently, and/or has the requisite experience and sophistication to understand, interpret, and
agree to the particular language of the provisions hereof. In the event of an ambiguity in or dispute
regarding the interpretation of same, the interpretation of this Agreement shall not be resolved by
any rule of interpretation providing for interpretation against the Party who causes the uncertainty
to exist or against the drafter.
16. Severability. If any part of this Agreement is held to be illegal or unenforceable by
court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest
extent reasonably possible.
17. Governing Law. This Agreement and any dispute arising hereunder shall be
governed by interpreted in accordance with the laws of the State of California.
18. Waiver. Failure by a Party to insist upon the strict performance of any of the
provisions of this Agreement by any other Party hereto, or the failure by a Party to exercise its
rights upon the default of any other Party, shall not constitute a waiver of such Party’s right to
insist and demand strict compliance by such other Party with the terms of this Agreement
thereafter.
19. No Third Party Beneficiaries. No person or entity other than the CFD, when and if
formed, shall be deemed to be a third party beneficiary hereof, and nothing in this Agreement
(either express or implied) is intended to confer upon any person or entity, other than EMWD, the
City, the CFD and Property Owner (and their respective successors and assigns, exclusive of
individual homebuyers), any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
20. Singular and Plural; Gender. As used herein, the singular of any word includes the
plural, and terms in the masculine gender shall include the feminine.
21. 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.
[Remainder of page intentionally left blank]
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -15-
#195554 v2 9167.5
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and
year written above.
CITY OF MENIFEE
Armando G. Villa, City Manager
ATTEST:
By:
Sarah Manwaring, City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY OF THE CITY OF MENIFEE
By:
Jeffrey T. Melching, City Attorney
[SIGNATURES CONTINUED ON NEXT PAGE.]
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20 -16-
#195554 v2 9167.5
EASTERN MUNICIPAL WATER DISTRICT
Paul D. Jones II, General Manager
ATTEST:
By:
Sheila Zelaya, Board Secretary
PROPERTY OWNER
STRATA HOLLAND, LLC, a Delaware limited
liability company
By: Strata Equity RES, LLC, a California
limited liability company
Its: Manager
By:
David L. Michan
Its: Manager
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20
EXHIBIT “A”
-1- #195554 v2 9167.5
EXHIBIT “A”
COMMUNITY FACILITIES DISTRICT NO. 2020-2
OF THE CITY OF MENIFEE (DEL ORO)
DEPICTION OF PROPERTY
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20
EXHIBIT “B”
-1- #195554 v2 9167.5
EXHIBIT “B”
COMMUNITY FACILITIES DISTRICT NO. 2020-2
OF THE CITY OF MENIFEE (DEL ORO)
DESCRIPTION OF PROPERTY
Riverside County Assessor Parcel Number(s):
372-040-043-1
372-040-044-2
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20
EXHIBIT “C”
-1- #195554 v2 9167.5
EXHIBIT “C”
COMMUNITY FACILITIES DISTRICT NO. 2020-2
OF THE CITY OF MENIFEE (DEL ORO)
FACILITIES DESCRIPTION
1. EMWD Facilities. The type of EMWD Facilities eligible to be financed by the
CFD under the Act are as follows:
Those water and sewer facilities included in EMWD’s water and sewer capacity and
connection fee programs used to finance expansion projects, exclusive of in-tract facilities
contributed by Property Owner. EMWD Facilities include, but are not limited to the following:
water and sewer transmission pipelines, sewer treatment plants, disposal ponds, pumping plants,
lift stations and water reservoirs, including all costs of site acquisition, planning, design,
engineering, legal services, materials testing, coordination, surveying, construction staking,
construction, inspection and any and all appurtenant facilities and appurtenant work relating to the
foregoing.
2. Acquisition Facilities. The types of Acquisition Facilities eligible to be financed
by the CFD under the Act shall consist of sewer and water transmission lines, sewer and water
pump stations and water reservoirs, including all costs of site acquisition, planning, design,
engineering, legal services, materials testing, coordination, surveying, construction staking,
construction inspection and any and all appurtenant facilities to the foregoing required to serve the
Property. The facilities listed above are representative of the types of facilities eligible to be
financed by the CFD as Acquisition Facilities. Detailed scope and limits of specific projects will
be determined by EMWD as appropriate, consistent with the standards of the EMWD.
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20
EXHIBIT “D”
-1- #195554 v2 9167.5
EXHIBIT “D”
COMMUNITY FACILITIES DISTRICT NO. 2020-2
OF THE CITY OF MENIFEE (DEL ORO)
DISBURSEMENT REQUEST FORM
(EMWD Facilities)
1. City of Menifee Community Facilities District No. 2020-2 of the City of Menifee
(Del Oro) (“CFD”) is hereby requested to pay from the CFD bond proceeds (“Bond Proceeds”) to
Eastern Municipal Water District (“EMWD”), as Payee, or to EMWD’s designee, the sum set
forth in 3 below.
2. The undersigned certifies that the amount requested for EMWD Facilities is due
and payable, has not formed the basis of prior request or payment, and is being made with respect
to the connection of the property described below to the EMWD system.
3. Amount requested: $________________
For Tract/Lot Nos: _________________
4. The amount set forth in 3 above is authorized and payable pursuant to the terms of
the Joint Community Facilities Agreement, by and among the City of Menifee, EMWD and Strata
Holland, LLC., dated ____________, 2020 (the “Agreement”). Capitalized terms not defined
herein shall have the meaning set forth in the Agreement. EMWD shall spend the Bond Proceeds
allocated hereby in accordance with the requirements set forth in Section 5 of the Agreement.
5. By entering into the Agreement and requisitioning Bond Proceeds as described
herein, EMWD is not passing upon, determining or assuming the tax-exempt status of the Bonds
for federal or California state income tax purposes.
PROPERTY OWNER
STRATA HOLLAND, LLC, a Delaware limited
liability company
By:
EASTERN MUNICIPAL WATER DISTRICT
By:
Name:
Title:
Date:
cc: EMWD Special Funding District
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20
EXHIBIT “E”
-1- #195554 v2 9167.5
EXHIBIT “E”
CITY OF MENIFEE
COMMUNITY FACILITIES DISTRICT NO. 2020-2 (DEL ORO)
PAYMENT REQUEST FORM
CITY OF MENIFEE CFD NO. 2020-2 – OTHER FACILITIES ACCOUNT
OF THE IMPROVEMENT FUND
City of Menifee (“City”), Eastern Municipal Water District (“EMWD”) and
_______________ (“Property Owner”) are parties to the Joint Community Facilities Agreement,
dated as of __________ (the “EMWD JCFA”). Capitalized undefined terms used herein shall
have the meanings ascribed thereto in the EMWD JCFA. Pursuant to the EMWD JCFA, Property
Owner hereby requests approval of the acquisition price of the Acquisition Facility(ies) described
in Attachment A attached hereto. In connection with this Payment Request, Property Owner
hereby represents and warrants to the EMWD as follows:
(a) The person executing this Payment Request is qualified to execute this Payment
Request on behalf of Property Owner and knowledgeable as to the matters set forth herein.
(b) The Acquisition Facility(ies) have been constructed in accordance with the Plans
therefor, and in accordance with all applicable EMWD standards and the requirements of the
EMWD JCFA.
(c) The true and correct Actual Cost of the Acquisition Facility(ies) is set forth in
Attachment A.
(d) Property Owner has submitted or submits herewith to EMWD the contracts,
invoices, receipts, worksheets and other evidence of Actual Costs which are in sufficient detail to
allow the EMWD Representative to verify the Actual Cost of the Acquisition Facility(ies) for
which payment is requested.
(e) There are no liens, rights to lien or attachment upon, or claims affecting the right to
receive the payment requested herein which has not been released or will not be released
simultaneously with the payment of such obligation, other than materialmen’s or mechanics’ liens
accruing by operation of law. Copies of lien releases for all work for which payment is requested
hereunder are attached hereto.
Property Owner hereby declares under penalty of perjury that the above representations
and warranties are true and correct.
[Remainder of page intentionally left blank]
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20
EXHIBIT “E”
-2- #195554 v2 9167.5
Property Owner hereby requests that the acquisition price be paid to the person or persons,
in the amount set forth in Attachment B hereto.
PROPERTY OWNER
STRATA HOLLAND, LLC, a Delaware limited
liability company
By:
CONFIRMATION AND APPROVAL BY EMWD
EMWD has (a) confirmed that the Acquisition Facility(ies) described in Attachment A is
complete and was constructed in accordance with the Plans therefor, and (b) reviewed, verified
and approved the acquisition price of such Acquisition Facility(ies). Such Acquisition Facility(ies)
is/are complete and the acquisition price therefor eligible for payment is $________. The amount
to be paid and the payee(s) are described in Attachment B.
Date: AUTHORIZED REPRESENTATIVE OF EMWD
By:
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20
EXHIBIT “E”
-3- #195554 v2 9167.5
ATTACHMENT A
Acquisition Facility Actual Cost Acquisition Price*
Total Acquisition Price to be Paid:
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628
124/031858-0001
14867917.1 a08/03/20
EXHIBIT “E”
-4- #195554 v2 9167.5
ATTACHMENT B
ACQUISITION PRICE PAYMENT INSTRUCTIONS
[Include name and address of payee and wire transfer instructions]
DocuSign Envelope ID: 0DA24126-F909-40D0-B6B2-A3BFAAA82628