KIRKWOOD MEADOWSPUBLIC UTILITY

DISTRICTMello-Roos

Community Facilities District 98-01Rate and Method of Apportionment

Proposed Amendment

December 13, 2013

BACKGROUND

Mello-Roos Community Facilities District formed in 1998 to fund $6.2M in improvements to Wastewater Treatment Plant. essentially a “prepaid” connection fee for specific areas

of Kirkwood. At the time the bond was approved there were a

few large parcels comprising of both ski and development acreage. Planned to redo boundaries once Specific Plan approved, never accomplished

Vail condition of purchasing Kirkwood was to remove the encumbrance from “ski” land (where there is no plan for development or wastewater connection)

DISTRICT ROLE

KMPUD Board agreed to work on this subject to: No other CFD members, besides KCP and Vail, being

adversely impacted. That the District is financially secure with this

change That KCP provide proper Indemnification to protect

the District from future suits District not exposed to out of pocket costs All outstanding KCP receivables paid in full

District consulting team: Dick Shanahan (general counsel), David Fama (bond

counsel) and Victor Irzyk (bond administrator).

STRUCTURE

Methodology changed from an acreage based allocation to a residential dwelling unit allocation: Better alignment with rationale of CFD (prepaid tap fee) Acreage replaced with undeveloped parcels Improved collateral position for bondholders

(assessment levy “matched” to parcel value) Ties into Specific Plan Developable units tied to parcels but can be moved “Backup tax” concept applies in the event of large

default KCP / future development shoulders this risk, consistent

with the prior structure

PROPOSED LAND USE CLASSIFICATION

CURRENT DEVELOPMENT ALLOCATION

* Based on KCP development plans as of December 3, 2013

PROPOSED ASSESSMENT ALLOCATION

CREDIT ENHANCEMENTS

Cross-Collateralize all undeveloped KCP property Delinquency on any single property puts all

property in default Cash Collateral

Two years of incremental assessments on all undeveloped (relative to today): $472K. Collateral released upon CO

Full Indemnification, based on security of cash collateral

Cash Collateral

How the Cash Collateral of $472K was Arrived at: Total Undeveloped Liability (KCP and Vail) = $283,370 Less Current KCP Liability = $47,010 Multiplied by Two (Based on the 18 month

period it takes to foreclose on a delinquent property)

Equals $472,720, Cash Collateral

RECOMMENDATION OF APPROVAL

Opportunity to modernize / update RMA to current best practice

Alignment of assessment with original intent Within authority of existing CFD documents

and specifically envisioned during zoning changes (2003)

Fairness and Materiality Considerations No impact to existing owners in the CFD Reduced or mitigated risks to bondholders and the

District Conservative credit enhancements