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RESOLUTION NO. 9 27RESOLUTION OF THE CITY COUNCIL OF THE CITY OF INDIO, CALIFORNIA,CANVASSING THE RESULTS OF THE ELECTION HELD WITHIN IMPROVEMENTAREA NO. 1 AND IMPROVEMENT AREA NO. 2 OF THE CITY OF INDIOCOMMUNITY FACILITIES DISTRICT NO. 2004-3 TERRA LAGO)

WHEREAS, the City Council (the Council ) of the City of Indio (the City ) haspreviously conducted proceedings pertaining to the formation of the City of Indio CommunityFacilities District No. 2004-3 (Terra Lago) (the CFD ), the authorization of indebtedness in theamounts not to exceed $30,000,000 and $30,000,000 within Improvement Area No. 1 andImprovement Area No. 2, respectively, of the CFD, the rate and method of apportionment for thelevy and collection of special taxes (the Special Tax ) to pay the principal and interest on bondsissued or other debt, and the establishment of an appropriations limit, and the calling of anelection in regard to the foregoing; and

WHEREAS, on July 20, 2005, an election was held within Improvement Area No. 1 andImprovement Area No. 2 of the CFD relative to the authorization of not to exceed $30,000,000and $30,000,000 of indebtedness within Improvement Area No. 1 and Improvement Area No. 2,respectively, of the CFD, the rate and method of apportionment of the Special Tax, and theestablishment of an appropriations limit; and

WHEREAS, at such election the proposal for incurring the bonded indebtedness, the rateand method of apportionment and manner of collection of the Special Tax and establishing anappropriations limit for each Improvement Area No. 1 and Improvement Area No. 2 of the CFDwas approved by the requisite 2/3 of the votes cast by qualified electors of Improvement AreaNo. 1 or Improvement Area No. 2 of the CFD, as applicable.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF INDIO DOESHEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:

Section 1. It is hereby determined that the election conducted within each ImprovementArea No. 1 and Improvement Are No. 2 of the CFD was duly and validly conducted.

Section 2. The Council, acting as the legislative body of the CFD, is authorized to levythe Special Tax on behalf of the CFD, as specified in Ordinance No. 1441, (the Resolution ofFormation ) adopted by the Council on July 20, 2005.

Section 3. The Council is authorized to incur indebtedness on behalf of the CFD forImprovement Area No. 1 and Improvement Area No. 2 of the CFD, in the maximum amounts of$30,000,000 and $30,000,000, respectively.

Section 4. The City is authorized to establish an appropriations limit for ImprovementArea No. 1 and Improvement Area No. 2 of the CFD.

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HERNANDEZ CMCUT LERK

Section 5. The City Clerk is hereby directed and authorized to record notice of thespecial tax of the CFD by recording a Notice of Special Tax Lien of the CFD pursuant toSection 3117.5 of the California Streets and H ighways C ode.

PASSED APPROVED and ADOPTED this 20th day of July 2005 by the followingvote:

AYES: Gilbert Godfrey R amos W atson W ilson FesmireNOES: None

FESMIRE MAYORATTEST:

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DOC ti 2005 060306407 28 2005o n f o r m e d o p y

RECORDING REQUESTED BYAND WHEN RECORDED RETURN TO:City of Indio100 Civic Center M allIndio California 92201Attention: Cynthia Hernandez

Has not been compared with originalL a r r y W a r d

ounty o RiversideAssessor, County Clerk Recorder

NOTICE OF SPECI L T X LIEN

Pursuant to the requirements of Section 3114.5 of the Streets and Highways Code andSection 53328.3 of the Government Code, the undersigned clerk of the legislative body of theCity of Indio (the City ), State of California, hereby gives notice that a lien to secure paymentof special taxes is hereby imposed by the City Council of the City. The special taxes secured bythis lien are authorized to be levied for the purpose of financing public infrastructure facilitiesand other governmental facilities with an estimated useful like of five years or longer including,but not limited to, streetscape, landscape, traffic controls, storm drain, water and sewer facilities,dry utilities, other City fees and facilities, other Valley Sanitary District fees and facilities, otherImperial Irrigation District fees and facilities, and related costs including designs, inspections,professional fees, connection fees and acquisition costs, and for the purpose of paying principaland interest on bonds issued with respect to each improvement area.

The special taxes are authorized to be levied within the improvement areas of the City ofIndio Community Facilities District No. 2004-3 (Terra Lago) (the District ) which has nowbeen officially formed and the lien of the special taxes are a continuing lien which shall secureeach annual levy of the special taxes and which shall continue in force and effect until the specialtaxes cease to be levied and a notice of cessation of special taxes is recorded in accordance withSection 53330.5 of the Government Code.

The rate and method of apportionment, and manner of collection of authorized specialtax, for each improvement area is as set forth in Exhibit A attached hereto and hereby made apart hereof. Conditions under which the obligation to pay the special taxes may be prepaid andpermanently satisfied and the lien of the special taxes canceled are as set forth in Exhibit Aattached hereto.

Notice is further given that upon the recording of this notice in the office of the countyrecorder, the obligation to pay the special tax levies shall become a lien upon all nonexempt realproperty within the respective improvement areas of the District in accordance with Section3115.5 of the Streets and Highways Code.

The name of the owner(s) and the assessor's tax parcel number(s) of the real propertyincluded within the respective improvement areas of the District and not exempt from the specialtax are as set forth in Exhibit B attached hereto.

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Y CLERK OF THE CITY OF JO

Reference is made to the boundary map of the District recorded at Book 62 of Maps ofAssessment and Community Facilities Districts at Page 88, in the office of the County Recorderfor the County of Riverside, California which map is now and final boundary map of the District.

For further information concerning the current and estimated future tax liability ofowners or purchasers of real property subject to this special tax lien, interested persons shouldcontact the Finance Director of the City of Indio, 100 Civic Center Mall, Indio, California 92201,760) 342-6560.

i a 4 A e n sated:

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G L O R I A C O N N M YCo m m issio n 1493273N o l a nPublic CaMomioWeald CountyMy Comm . Expires Jun 1,TATE OF CALIFORNIA ) ss.COUNTY OF RIVERSIDE

On7:4../A 20 u efore m e , 4 A y i k t here insertname and title o the officer), personally appeared 1 - 4 ; t _ id1/0 04 6 personallyknown to me eati-proverrto o be the person whosename is subscribed to the within instrument and acknowledged to me that she executed the samein her authorized capacity, and that by her signature on the instrument the person, or the entityupon which the person acted, executed the instrument.

WITNESS my hand and official seal.

Signature SEAL)

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EXHIBIT

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FORCOMMUNITY FACILITIES DISTRICT NO. 2004-3

(TERRA LAGO)CITY OF INDIO, CALIFORNIA

A Special Tax (all capitalized terms are defined in Section A., Definitions below) shall beapplicable to each Parcel of Taxable Property located within the boundaries of CommunityFacilities District No. 2004-3 (TERRA LAGO). The amount of Special Tax to be levied in eachImprovement Area in each Fiscal Year, commencing in Fiscal Year 2005-2006 on a Parcel shallbe determined by the City Council of The City of Indio, acting in its capacity as the legislativebody of the CFD by applying the appropriate Special Tax for Developed Property, UndevelopedProperty and Public Property and/or Property Owner s Association Property that is not ExemptProperty as set forth in Sections B., C., and D., below. All of the real property within the CFD,unless exempted by law or by the provisions hereof in Section E., shall be taxed for the purposes,to the extent and in the manner herein provided.A. DEFINITIONS

The terms hereinafter set forth have the following meanings:Acre or Acreage means the acreage of a Parcel as indicated on the most recent Assessor s

Parcel Map, or if the land area is not shown on the Assessor s Parcel Map, the land areashown on the applicable Final Map, parcel map, condominium plan, or other similarinstrument.Act means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter

2.5, Part of Division 2 of Title 5 of the California Government Code of the State ofCalifornia.Administrative Expenses means all actual or reasonably estimated costs and expenses of

the District that are chargeable or allocable to the applicable Improvement Area to carry outits duties as the administrator of the FD as allowed by the Act, which shall include withoutlimitation, all costs and expenses arising out of or resulting from the annual levy andcollection of the Special Tax, trustee fees, rebate compliance calculation fees, and legalissues, or actual, potential or threatened litigation involving the CFD, continuing disclosureundertakings of the District as imposed by applicable laws and regulations, communicationwith bondholders and normal administrative expenses.Administrator means an official of the District, or designee thereof, responsible for

determining the levy and collection of the Special Taxes.Assessor's Parcel Map means an official map of the Assessor of the County of Riverside

designating parcels by Assessor s Parcel number.Assigned Special Tax means the Special Tax for each Land Use Category of Developed

Property, as determined in accordance with Section C.1.a., below.City of Indio uly 27, 2005Community Facilities District No. 2004-3 (Terra Lago) age 1

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Backup Special Tax means the Special Tax of that name described in Section E below.Bonds means any bonds or other indebtedness (as defined in the Act) issued by an

Improvement Area of the CFD and secured by the levy of Special Taxes within suchImprovement Area.Boundary Map means a map showing the territory area within the boundaries of CFD2004-3 identified on EXHIBIT ACFD means Community Facilities District No. 2004-3 (TERRA LAGO) of the District

established pursuant to the Act.Council means The City of Indio City CouncilCounty means the County of Riverside.Developed Property means all Parcels of Taxable Property, not classified as Undeveloped

Property, Public Property and/or Property Owner's Association Property that are not ExemptProperty pursuant to the provisions of Section E. below: (i) that are included in a Final Mapthat was recorded prior to January 1 t preceding the Fiscal Year in which the Special Tax isbeing levied and (ii) a building permit for new construction has been issued prior to April 1 tpreceding the Fiscal Year in which the Special Tax is being levied.Exempt Property means any Parcel, which is exempt from Special Taxes pursuant to

Section E., below.Final Map means a subdivision of property by recordation of a final map, parcel map, or

lot line adjustment, pursuant to the Subdivision Map Act (California Government CodeSection 66410 et seq. or recordation of a condominium plan pursuant to California CivilCode 1352 that creates individual lots for which building permits may be issued withoutfurther subdivision.Fiscal Year means the period starting on July 1 and ending on the following June 30.Improvement Area(s) means Improvement Area 1, Zone A or Zone B or Improvement

Area 2, Zone A or Zone B as geographically identified on EXHIBIT B .Improvement Area 1, Zone A means the specific area identified on EXHIBIT B as

Improvement Area 1, Zone A of the CFD.area identified on EXHIBIT B as

area identified on EXHIBIT B as

area identified on EXHIBIT B as

Improvement Area 1, Zone B means the specificImprovement Area 1, Zone B of the CFD.Improvement Area 2, Zone A means the specific

Improvement Area 2, Zone A of the CFD.Improvement Area 2, Zone B means the specific

Improvement Area 2, Zone B of the CFD.City of IndioCommunity Facilities District No. 2004-3 (Terra Lago)

July 26, 2005Page 2

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4.17'01'37R=829.93'L-246.64'17 , 68 E

689 '53 '06 -E335 04

4=08'48'05R-1557.40L-239.23'

NO0 '02 '35 t8937 19E 1338 62N89 '36 '07E 1389 35

VICINITY MAPNTS

N89 35 '38 E 1346 23

114.63

4-13 '15 30*0=754 93L=174.69689'33'53 -E 1350 73

s

4-06'01'18'8-1232.40L-129.52'

W.O. 05-0023

..2415.30R.029.93L-351.3B

4=1705'57IR-829.93L-247 68'

SHEET I OFI SHEETEXHIBIT A

RELTA.EO THIS AY OF 2005 AT TIE HOLP OF_O CK _Al IN BOOK AGES F MAPS OF ASSESSAENTAND COMMUNTY F AC IL IT IES DISTRICTS. INRE OFF ICE OF TIE COUNTYRECORDER INTIE COUNTY OF RIVERSIDE. S T T E OF CAL IFOMIA

BYDEPUTY

I HEREBY CERTIFY THAT TIE WITHINMAP SHOVING P ROPOSEDBOIAIJARIES OF COMKNITY FACILITIES DISTRICT NO. 2004-3TERRA LAOS) C TY OF IAC O. CO GIT Y OF RIVERSIDE. STATEOF CALIFORNA. WAS APPROVED BY TIE CTY COLACL OF TICITY OF I14210 AT A REGIGAR MEETING THMEOF. BELO ONIKE AY OF 2005BY ITS RESOLUTIONNO

C IT Y CLERK OF TIE CITY OF I1010. STATE OF CAL IFORNIA

FILED IN THE OFFICE OF TIE CITY CLERK OF TIE CITY OF INDIOSTATE LT CALIFORNIA. THIS AY OF 2005

CITY CLEM OF THE CITY OF ACID STATE OF CALIFORNIA

687 *46 'OB E 353 33 EELARRY W. WAlE, RIVERSIDE COUNTY ASSESSORLERK -RECORDERTO T6S2

BOUNDARY MAPCOMMUNITY FACILITIES DISTRICT NO. 2004 3

TERRA LAGOCITY OF INDIO, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA

4-21'12'308E1557.40L-576 AB'

N33 '4958 E259.222j2%04S.

N8959 '29453.65'N55 '013 '51'W332.88'

4-29'43'00'8=1079 93L-560.11'MOO '02 '40542.02 84 '52 '07'w 1'18'15-794 28 R.352 46 'L-315.60'

T 6 0

NO0 '02 40 -E 58.66'

4-16'3252 051582 39' L-457.01'NOT TO SCALE N50 '12 43W 352.69

4=333618 8-422 96 L=248.07

ALE1 E R T . THIS BOUNDARY MAP CORRECL Y SHOWS EACH SEPARATE LOTW OR PARCEL OF LAM INCLUDED WITHIN TIE BOLICARIES OFLOSES AM DIMENSIONS OF LOTS OR PARCELS REFER TO TIETHE ASSESSMENT DISTRICT. FOR DETAILS COACERNAG TIEASSOCIATESCOUNTY ASSESSORS MAPS F OR FISCAL YEAR 2004-20050 1 0 1 1 1 1 1 1 3 . 0 C O N 1 1 0 1 T . M 1

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IMPROVEAMTAREA NO. 2

SNEET IN SlEET

EXHIBIT BP P R O VE ME N T R E S

C0* 4. ACLMES DISTRICT NO. 2004-3TERRA LAGO )

CITY OF P4D10, COUNTY OF RIVERS= STATE OF CALFORMA

IMPROVEMENTAREA NO. 2ZONE B)

IMPROVEMENTAREA NO. 1ZONE B )

IMPROVEMENTAREA NO. 2ZONE A)MPROVEMENTAREA NO. 1ZONE B )

I

MOVEMENT AFEA IOLF CURSE LOTS ZONE B

LAKE LOTS ZONE B )B SE RESIDENTIAL LOTS ZONE A

[

IMPROVEMENTAREA NO. 2ZONE A )

G O L COWSE LOTS ZONE BBASE FESIVENTIAL LOTS ZOPE A

NOT TO SC LE IMPROVEMENT MPROVEMENTAREA NO. 1 REA NO. 2

IMPROVEMENTAREA NO. 2ZONE A )

IMPROVEMENTAREA NO. 1ZONE A)

DPROIEMEPIT AREA 2

M.O. 05-0023

IMPROVEMENTAREA NO. 1ZONE A )

LBERTWESSOCI TESvgammaxon i OMOLIUMII

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Indenture means the bond indenture, fiscal agent agreement, trust agreement, resolutionor other instrument pursuant to which Bonds are issued, as modified, amended and/orsupplemented from time to time, and any instrument replacing or supplementing the same.Land Use Category means any of the categories listed in Tables 1, 2, 3, 4 and 5.Maximum Special Tax means the maximum Special Tax, determined in accordance with

Section C., which can be levied in any Fiscal Year on any Parcel.Multifamily Residential Property means any Parcel of Developed Property that consists

of a building or buildings comprised of attached residential units available for rental by thegeneral public, or for sale to an end user, and may be under common management.Non-Residential Property means all Parcels of Developed Property for which a building

permit was issued for any type of non-residential use.

Parcel(s) means a lot or parcel shown on an Assessor s Parcel Map with an assignedparcel number valid at the time the Special Tax is enrolled for the Fiscal Year for which theSpecial Tax is being levied.Property Owner's Association Property means any Parcel within the boundary of the

CFD, which, at the time the Special Tax is enrolled for the Fiscal Year for which the SpecialTax is being levied has been conveyed, dedicated to, or irrevocably dedicated to a propertyowner association, including any master or sub-association.Proportionately means for (i) Developed Property that the ratio of the actual Special Tax

levy to the Assigned Special Tax is the same for all Parcels of Developed Property, andUndeveloped Property, Public Property and/or Property Owner s Association Property that isnot Exempt Property pursuant to Section E., that the ratio of the actual Special Tax levy peracre to the Maximum Special Tax per acre is the same for all such Parcels.Public Property means any Parcel within the boundary of the CFD which, at the time the

Special Tax is enrolled for the Fiscal Year for which the Special Tax is being levied, is usedfor rights-of-way or any other purpose and is owned by, dedicated to, or irrevocably offeredfor dedication to the Federal Government, the State of California, the County, City or anyother local jurisdiction, provided, however, that any property leased by a public agency to aprivate entity and subject to taxation under Section 53340.1 of the Act shall be taxed andclassified according to its use.

Residential Floor Area means all of the square footage of living area of a residentialstructure, not including any carport, walkway, garage, overhang, patio, enclosed patio orsimilar area on a Parcel. The determination of Residential Floor Area shall be made byreference to the building permit(s) for the Parcel or similar official document means selectedby the Administrator. Once such determination has been made for a Parcel, it shall remainfixed in all future Fiscal Years.

Residential Property means all Parcels of Developed Property for which a buildingCity of Indio uly 26, 2005Community Facilities District No. 2004-3 (Terra Lago) age 3

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permit has been issued for purposes of constructing one or more residential dwelling units.Single Family Property means all Parcels of Residential Property, other than Multifamily

Residential Property, for which building permits have been issued for detached or attachedresidential units.Special Tax(es) means the special tax to be levied in each Fiscal Year on each Parcel ofTaxable Property.Special Tax Requirement(s) means that amount required in any Fiscal Year to pay for

Special Tax Requirement for Improvement Area 1, Zone A or Zone B, or for Special TaxRequirement for Improvement Area 2, Zone A or Zone B.Special Tax Requirement for Improvement Area 1 means that amount required in any

Fiscal Year within Improvement Area 1 of the CFD to pay: (i) annual debt service on alloutstanding Bonds due in the calendar year which commences in such Fiscal Year; (ii)periodic costs on the Bonds, including but not limited to, credit enhancement and rebatepayments on the Bonds; (iii) Administrative Expenses; (iv) an amount equal to anyanticipated shortfall due to Special Tax delinquency in the prior Fiscal Year; and (v) anyamounts required to establish or replenish any reserve funds for the outstanding Bonds; less(vi) a credit for funds available to reduce the annual Special Tax levy as determined pursuantto the Indenture.Special Tax Requirement for Improvement Area 2 means that amount required in any

Fiscal Year within Improvement Area 2 of the CFD to pay: (i) annual debt service on alloutstanding Bonds due in the calendar year which commences in such Fiscal Year; (ii)periodic costs on the Bonds, including but not limited to, credit enhancement and rebatepayments on the Bonds; (iii) Administrative Expenses; (iv) an amount equal to anyanticipated shortfall due to Special Tax delinquency in the prior Fiscal Year; and (v) anyamounts required to establish or replenish any reserve funds for the outstanding Bonds; less(vi) a credit for funds available to reduce the annual Special Tax levy as determined pursuantto the Indenture.Taxable Property means all Parcels in an Improvement Area which have not prepaid

pursuant to Section H. or are not exempt from the Special Tax pursuant to law or Section E.,below.Undeveloped Property means all Taxable Property not classified as Developed Property,

Public Property and/or Property Owner s Association Property that is not Exempt Propertypursuant to the provisions of Section E.

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A. ASSIGNMENT TO LAND USE CATEGORYEach Fiscal Year, commencing with the 2005-2006 Fiscal Year, all Parcels of TaxableProperty within the CFD shall be categorized into the applicable Improvement Area andclassified as either Developed Property, Undeveloped Property, Public Property and/orProperty Owner s Association Property that is not Exempt Property pursuant to theprovisions in Section E., and shall be subject to the levy of Special Taxes in accordance withthis Rate and Method of Apportionment as determined pursuant to Sections C., and D.,below.Parcels of Developed Property shall further be classified as Residential Property or Non-Residential Property. A Parcel of Residential Property shall further be classified as SingleFamily Property or Multifamily Residential Property. Single Family Property shall befurther categorized based on the Residential Floor Area for such Parcel.

C. MAXIMUM SPECIAL TAX RATE

1. Developed PropertyThe Maximum Special Tax for each Parcel of Single Family Property within itsapplicable Improvement Area shall be the applicable Assigned Special Tax described inTable 1, 2, 3, or 4.The Maximum Special Tax for each Parcel of Non-Residential Property within itsapplicable Improvement Area shall be the Assigned Special Tax described in Table 1, 2,3 or 4.a. ssigned Special Tax

The Assigned Special Tax for each Parcel of Developed Property within itsapplicable Improvement Area is shown in Table 1, 2, 3, or 4.

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TABLEAssigned Special Taxes for Property within

Improvement Area 1, Zone A. . .

..

Sin:le Famil ro erty DU . 1,828.87ess than 1,501 SFSin:le Famil ro.ert DU 1,501 SF to 1,625 SF 2,028.55Sin:le Famil ro.ert DU 1,626 SF to 1,750 SF 2,228.22Sin:le Famil ro.ert DU 1,751 SF to 1,900 SF 2,467.83Sin:le Famil ro.ert DU 1,901 SF to 1,950 SF 2,547.70Sin:le Famil ro.ert DU 1,951 SF to 2,100 SF 2,605.98Sin:le Famil ro erty DU 2,101 SF to 2,150 SF 2,681.53Sin:le Family Pro erty DU 2,151 SF to 2,250 SF 2,832.63Sin:le Family Pro erty DU 2,251 SF to 2,300 SF 2,908.19Sin:le Famil ro.ert DU 2,301 SF to 2,400 SF 3,059.29Sin:le Famil ro.ert DU 2,401 SF to 2,500 SF 3,102.46Sin:le Famil ro.ert DU 2,501 SF to 2,550 SF 3,175.86Sin:le Famil ro.ert DU 2,551 SF to 2,600 SF 3,249.25Sin:le Famil ro.ert DU 2,601 SF to 2,850 SF 3,616.22Sin:le Famil Pro erty DU Over 2,850 SF 4,056.57Multi Family Pro erty Acre N/A 20,460.00Non Residential Pro.ert Acre N/A 20,460.00

On each July 1, commencing on July 1, 2007, for a period of five (5) years, untilJuly 1, 2012, the Assigned Special Tax shall be increased by one percent (1.00%) of theamount in effect in the prior Fiscal Year.

City of IndioCommunity Facilities District No. 2004-3 (Terra Lago)

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TABLE 2Assigned Special Taxes for Property within

Improvement Area 1, Zone

` t

r;4060106 Ltg1r ll .'eW* llgirjLess than 1,501 SFSin le Famil ro.ert DU 2,519.63Sin le Famil ro.ert DU 1,501 SF to 1,625 SF 2,719.31Sin le Famil ro.ert DU 1,626 SF to 1,750 SF 2,918.98Single Family Propert DU 1,751 SF to 1,900 SF 3,158.59Single Famil roperty DU 1,901 SF to 1,950 SF 3,238.46Sin le Famil ro.ert DU 1,951 SF to 2,100 SF 3,372.29Sin le Famil ro.ert DU 2,101 SF to 2,150 SF 3,469.43Sin le Famil ro.ert DU 2,151 SF to 2,250 SF 3,523.39Sin le Famil ro.ert DU 2,251 SF to 2,300 SF 3,771.64Sin le Famil ro.ert DU Over 2,300 SF 3,965.91Multi Famil ro.ert Acre N/A 20,460.00Non Residential Pro pert Acre N/A 20,460.00

On each July 1, commencing on July 1, 2007, for a period of five (5) years, untilJuly 1, 2012, the Assigned Special Tax shall be increased by one percent (1.00%) of theamount in effect in the prior Fiscal Year.

TABLEAssigned Special Taxes for Property withinImprovement Area 2, Zone A

h r -vei . .

.....0.64.

. t ,

Sin le Famil ro.ert DU Less than 1,501 SF 1,677.77Sin le Famil ro.ert DU 1,501 SF to 2,000 SF 2,411.70Sin g le Famil ro ert DU 2,001 SF to 2,500 SF 3,162.90Sin le Famil ro.ert DU Over 2,500 SF 3,905.47Multi Family Pro Deily Acre N/A 22,304.00Non Residential Pro I ert Acre N/A 22,304.00On each July 1, commencing on July 1, 2007, for a period of five (5) years, untilJuly 1, 2012, the Assigned Special Tax shall be increased by one percent (1.00%) of theamount in effect in the prior Fiscal Year.

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1 - Undeveloped Property cre 20,460.002 - Undeveloped Property cre 22,304.00

TABLE 4Assigned Special Taxes for Property within

Improvemen t Area 2 Zone Bt

.. -..

Sin:le Famil Pro.ert U Less than 2,001 SF 3,154.27Sin:le Famil ro.ert DU 2,001 SF to 2,500 SF 3,905.47Sin:le Famil ro.ert DU 2,501 SF to 3,000 SF 4,648.04Single Family Pro serty DU Over 3,000 SF 4,665.31Multi Family Proserty Acre N/A 22,304.00Non Residential Pro.ert Acre N/A 22,304.00On each July 1, commencing on July 1, 2007, for a period of five (5) years, untilJuly 1, 2012, the Assigned Special Tax shall be increased by one percent (1.00%) of theamount in effect in the prior Fiscal Year.

1. Undeveloped PropertyThe Maximum Special Tax for each Parcel of Undeveloped Property within eachImprovement Area is shown in Table 5 below.

TABLE 5Undeveloped Property Maximum Special Tax Rate

On each July 1, commencing on July 1, 2007, for a period of five (5) years, untilJuly 1, 2012, the Maximum Special Tax shall be increased by one percent (1.00%) of theamount in effect in the prior Fiscal Year.

2. Public Property and/or Property Owner s Association Property that is not ExemptProperty pursuant to the provisions of Section E.The Maximum Special Tax for each Parcel of Public Property and/or Property Owners

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Association Property that is not Exempt Property pursuant to the provisions of Section E.,within each Improvement Area shall be the applicable Undeveloped Property MaximumSpecial Tax rate per Acre in Table 5.

D METHOD OF APPORTIONMENT OF THE SPECIAL TAX

Commencing with Fiscal Year 2005-2006 and for each following Fiscal Year, the Councilshall levy the Special Tax on all Taxable Property in each Improvement Area until theamount of Special Taxes equals the applicable Special Tax Requirement for eachImprovement Area in accordance with the following steps:

1 Improvement Area 1First: The Special Tax shall be levied on each Parcel of Developed Property at up to 100of the applicable Assigned Special Tax rate as needed to satisfy the Special Tax Requirementfor Improvement Area 1, Zone A and Zone B.Second: If additional moneys are needed to satisfy the Special Tax Requirement forImprovement Area 1, Zone A and Zone B, after the first step has been completed, the SpecialTax shall be levied Proportionately on each Parcel of Undeveloped Property withinImprovement Area 1, Zone A and Zone B at up to 100 of the Maximum Special Tax forUndeveloped Property;Third: If additional moneys are needed to satisfy the Special Tax Requirement after the firsttwo steps have been completed, then for each Assessor's Parcel of Developed Propertywhose Assigned Special Tax is the Backup Special Tax shall be increased Proportionatelyfrom the Assigned Special Tax up to 100 of the Backup Special Tax as needed to satisfythe Special Tax Requirement.2 Improvement Area 2

First: The Special Tax shall be levied on each Parcel of Developed Property at up to 100of the applicable Assigned Special Tax rate as needed to satisfy the Special Tax Requirementfor Improvement Area 2, Zone A and Zone B.Second: If additional moneys are needed to satisfy the Special Tax Requirement forImprovement Area 2, Zone A and Zone B, after the first step has been completed, the SpecialTax shall be levied Proportionately on each Parcel of Undeveloped Property withinImprovement Area 2, Zone A and Zone B at up to 100 of the Maximum Special Tax forUndeveloped Property;Third: If additional moneys are needed to satisfy the Special Tax Requirement after the firsttwo steps have been completed, then for each Assessor's Parcel of Developed Propertywhose Assigned Special Tax is the Backup Special Tax shall be increased Proportionatelyfrom the Assigned Special Tax up to 100 of the Backup Special Tax as needed to satisfythe Special Tax Requirement.

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Notwithstanding the above, under no circumstances will the Special Taxes levied against anyParcel of Residential Property within an Improvement Area be increased by more than tenpercent (10 ) per Fiscal Year as a consequence of delinquency or default by the owner of anyother Parcel within an Improvement Area of the CFD.E. BACKUP SPECIAL TAXES

Each Fiscal Year, each Assessor's Parcel of Developed Property classified as ResidentialProperty shall be subject to a Backup Special Tax. In each Fiscal Year, the Backup SpecialTax rate for Developed Property classified as Residential Property within a Final Map shallbe the rate per Lot calculated according to the following formula:

R x AB=L

The terms above have the following meanings:

B = Backup Special Tax per Lot in each Fiscal YearR = Maximum Special Tax rate per Acre for Undeveloped

Property for the applicable Fiscal YearA = Acreage of Developed Property classified or to be classified as Residential

Property in such Final MapL = Lots in the Final Map which are classified or to be classified as Residential Property

Notwithstanding the foregoing, if all or any portion of the Final Map(s) described in thepreceding paragraph is subsequently changed or modified, then the Backup Special Tax for eachAssessor's Parcel of Developed Property classified or to be classified as Residential Property insuch Final Map Area that is changed or modified shall be a rate per square foot of Acreagecalculated as follows:

1 Determine the total Backup Special Tax anticipated to apply to the changed or modifiedFinal Maps

2. The result of paragraph 1 above shall be divided by the Acreage of Developed Propertyclassified or to be classified as Residential Property which is ultimately expected to existin such changed or modified Final Map Area, as reasonably determined by the City.

3. The result of paragraph 2 above shall be divided by 43,560. The result is the BackupSpecial Tax per square foot of Acreage which shall be applicable to Assessor's Parcels ofDeveloped Property classified as Residential Property in such changed or modified FinalMap Area for all remaining Fiscal Years in which the Special Tax may be levied.

F. EXEMPTIONS

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The Council shall not levy Special Taxes on Public Property, Property Owner s AssociationProperty or Golf Course Property within each Improvement Area or Riverside CountyAssessor Parcel Numbers 601-150-024 and 601-270-018 located within Improvement Area 2of the CFD. Exempt Property status will be assigned by the Administrator in thechronological order in which property becomes Public Property, Property Owner sAssociation Property or Golf Course Property.

G. MANNER OF COLLECTIONThe Special Tax shall be collected in the same manner and at the same time as ordinary dv lorem property taxes and shall be subject to the same penalties, the same procedure, saleand lien priority in the case of delinquency; provided, however, that the Administrator maydirectly bill the Special Tax, may collect Special Taxes at a different time or in a differentmanner if necessary to meet its financial obligations, and may covenant to foreclose and mayactually foreclose on Parcels having delinquent Special Taxes as permitted by the Act ifnecessary to meet the financial obligations of the CFD.

H. APPEALSAny taxpayer may file a written appeal of the Special Tax on his/her Parcel(s) with theAdministrator, provided that the appellant is current in his/her payments of Special Taxes.During pendency of an appeal, all Special Taxes previously levied must be paid on or beforethe payment date established when the levy was made. The appeal must specify the reasonswhy the appellant claims the Special Tax is in error. The Administrator shall review theappeal, meet with the appellant if the Administrator deems necessary, and advise theappellant of its determination. f the Administrator agrees with the appellant, theAdministrator shall grant a credit to eliminate or reduce future Special Taxes on theappellant s Parcel(s). No refunds of previously paid Special Taxes shall be made.The Administrator shall interpret this Rate and Method of Apportionment and makedeterminations relative to the annual levy and administration of the Special Tax and anytaxpayer who appeals, as herein specified.

I. PREPAYMENT OF SPECIAL TAXThe following definitions apply to this Section H:Outstanding Bonds means all previously issued bonds issued and secured by the levy of

Special Taxes, which will remain outstanding after the first interest and/or principalpayment date following the current Fiscal Year, excluding bonds to be redeemed at a laterdate with the proceeds of prior prepayments of Maximum Special Taxes.1. repayment in FullThe Maximum Special Tax obligation may only be prepaid and permanently satisfied by aParcel of Developed Property, and/or Undeveloped Property for which a building permit hasbeen issued, and Public Property and/or Property Owner s Association Property that is notExempt Property pursuant to Section E. The Maximum Special Tax obligation applicable to

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such Parcel may be fully prepaid and the obligation of the Parcel to pay the Special Taxpermanently satisfied as described herein; provided that a prepayment may be made only ifthere are no delinquent Special Taxes with respect to such Parcel at the time of prepayment.An owner of a Parcel intending to prepay the Maximum Special Tax obligation shallprovide the Administrator with written notice of intent to prepay, and within 5 business daysof receipt of such notice, the Administrator shall notify such owner of the amount of thenon-refundable deposit determined to cover the cost to be incurred by the CFD incalculating the proper amount of a prepayment. Within 15 days of receipt of such non-refundable deposit, the Administrator shall notify such owner of the prepayment amount ofsuch Parcel. Prepayment must be made not less than 60 days prior to any redemption datefor any Bonds to be redeemed with the proceeds of such prepaid Special Taxes.The Prepayment Amount (defined below) shall be calculated as summarized below(capitalized terms as defined below):

Bond Redemption Amountplus edemption Premiumplus efeasance Amountplus dministrative Fees and Expensesless eserve Fund Credit

Total: equals repayment AmountAs of the proposed date of prepayment, the Prepayment Amount (defined below) shall becalculated as follows:

1 Confirm that no Special Tax delinquencies apply to such Parcel.

2. For Parcels of Developed Property, compute the Maximum Special Tax for the Parcelto be prepaid. For Parcels of Undeveloped Property to be prepaid, compute theMaximum Special Tax for that Parcel as though it was already designated asDeveloped Property, based upon the building permit which has already been issuedfor that Parcel. For Parcels of Public Property and/or Property Owner s AssociationProperty to be prepaid, compute the Maximum Special Tax for that Parcel.

3. Divide the Maximum Special Tax computed pursuant to paragraph 2 by the totalestimated Maximum Special Taxes based on the Developed Property Special Taxwhich could be charged, less any Parcels which have been prepaid.

4. Multiply the quotient computed pursuant to paragraph 3 by the Outstanding Bonds tocompute the amount of Outstanding Bonds to be retired and prepaid (the BondRedemption Amount ).

5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by theapplicable redemption premium, if any, on the Outstanding Bonds to be redeemed(the Redemption Premium ).

6. Compute the amount needed to pay interest on the Bond Redemption Amount fromCity of Indio uly 26, 2005Community Facilities District No. 2004-3 (Terra Lago) age 12

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the first bond interest and/or principal payment date following the current Fiscal Yearuntil the earliest redemption date for the Outstanding Bonds.

7. Determine the Special Taxes levied on the Parcel in the current Fiscal Year whichhave not yet been paid.

8. Compute the amount the Administrator reasonably expects to derive from thereinvestment of the Prepayment Amount less the Administrative Fees and Expensesfrom the date of prepayment until the redemption date for the Outstanding Bonds tobe redeemed with the prepayment.

9. Add the amounts computed pursuant to paragraphs 6 and 7 and subtract the amountcomputed pursuant to paragraph 8 (the Defeasance Amount ).

10. Verify the administrative fees and expenses, including the costs of computation of theprepayment, the costs to invest the prepayment proceeds, the costs of redeeming theOutstanding Bonds, and the costs of recording any notices to evidence theprepayment and the redemption (the Administrative Fees and Expenses ).

11. The reserve fund credit (the Reserve Fund Credit ) shall equal the lesser of: (a) theexpected reduction in the reserve requirement (as defined in the Indenture), if any,associated with the redemption of Outstanding Bonds as a result of the prepayment,or (b) the amount derived by subtracting the new reserve requirement (as defined inthe Indenture) in effect after the redemption of Outstanding Bonds as a result of theprepayment from the balance in the reserve fund on the prepayment date, but in noevent shall such amount be less than zero.

12. The Maximum Special Tax prepayment is equal to the sum of the amounts computedpursuant to paragraphs 4, 5, 9 and 10, less the amount computed pursuant toparagraph 11 (the Prepayment Amount ).

13. From the Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5, 9,and 11 shall be deposited into the appropriate fund as established under the Indentureand be used to retire Outstanding Bonds or make debt service payments. The amountcomputed pursuant to paragraph 10 shall be retained by the CFD.

The Prepayment Amount may be sufficient to redeem other than a 5,000 increment ofBonds. In such cases, the increment above 5,000 or integral multiple thereof will beretained in the appropriate fund established under the Indenture to be used with the nextprepayment of bonds or to make debt service payments.As a result of the payment of the current Fiscal Year's Special Tax levy as determined underparagraph 7 (above), the Administrator shall remove the current Fiscal Year's Special Taxlevy for such Parcel from the County tax rolls. With respect to any Parcel that is prepaid, theBoard shall cause a suitable notice to be recorded in compliance with the Act, to indicate theprepayment of Special Taxes and the release of the Special Tax lien on such Parcel, and theobligation of such Parcel to pay the Special Tax shall cease.

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Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless theamount of Maximum Special Taxes that may be levied on Taxable Property both prior to andafter the proposed prepayment is at least 1.1 times the maximum annual debt service on allOutstanding Bonds.Tenders of Bonds in prepayment of Maximum Special Taxes may be accepted upon theterms and conditions established by the Board pursuant to the Act. However, the use ofBond tenders shall only be allowed on a case-by-case basis as specifically approved by theBoard.

2 repayment in PartThe Maximum Special Tax on a Parcel of Developed Property or Undeveloped Property forwhich a building permit has been issued may be partially prepaid in increments of 2,000.The amount of the prepayment shall be calculated as in Section H.1; except that a partialprepayment shall be calculated according to the following formula:

PP P xF

These terms have the following meaning:PP = the partial prepaymentP = the Prepayment Amount calculated according to Section H.1F = the percent by which the owner of the Parcel(s) is partially prepaying theMaximum Special Tax.

The owner of a Parcel who desires to partially prepay the Maximum Special Tax shall notifythe Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax,(ii) the amount of partial prepayment expressed in increments of 2,000, and (iii) thecompany or agency that will be acting as the escrow agent, if applicable and within 5 days ofreceipt of such notice, the Administrator shall notify such property owner of the amount ofthe non-refundable deposit determined to cover the cost to be incurred by the CFD incalculating the proper amount of a partial prepayment. Within 15 business days of receipt ofsuch non-refundable deposit, the Administrator shall notify such owner of the partialprepayment amount of such Parcel. Partial prepayment must be made not less than 60 daysprior to any redemption date for any Bonds to be redeemed with the proceeds of such prepaidSpecial Taxes.With respect to any Parcel that is partially prepaid, the Administrator shall (i) distribute thefunds remitted to it according to Paragraph 13 of Section H.1, and (ii) indicate in the recordsof the CFD that there has been a partial prepayment of the Maximum Special Tax and that aportion of the Maximum Special Tax equal to the outstanding percentage (1.00 - F) of theremaining Maximum Special Tax shall continue to be authorized to be levied on such Parcelpursuant to Section D.

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J TERM OF THE SPECIAL TAX

For each year that any Bonds are outstanding the Special Tax shall be levied on all Parcelssubject to the Special Tax. If any delinquent Special Taxes remain uncollected prior to orafter all Bonds are retired, the Special Tax may be levied to the extent necessary to reimbursethe CFD for uncollected Special Taxes associated with the levy of such Special Taxes, butnot later than the Fiscal Year.

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EXHI IT

NAMES OF PROPERTY OWNERS ASSESSOR PARCEL NUMBERSIndio Land Ventures 601 150 025 0Indio Land Ventures 601 270 011 8Indio Land Ventures 601 270 012 9Indio Land Ventures 601 270 014 1Indio Land Ventures 601 270 019 6Indio Land Ventures 601 300 012 1Indio Land Ventures 601 310 001 2Indio Land Ventures 601 310 012 2Indio Land Ventures 601 310 015 5Indio Land Ventures 601 310 016 6Indio Land Ventures 601 390 032 8Woodside Portofino Inc. 601 270 013 0Woodside Portofino Inc. 601 270 015 2MW Housing Managers III/Lennar Corp 601 290 003 3The Ryland Group Inc. 601 290 008 8Ashbrook WHP Terra Lago 33 ACalifornia Limited Partnership 601 270 006 4