CELEBRATION COMMUNITY DEVELOPMENT DISTRICT (Osceola County, Florida) $6,035,000 Special Assessment Bonds Series 2003A

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1 New Issue - Book-Entry Only NOT RATED (See Absence of Ratings herein) In the opinion of Bond Counsel with respect to the Series 2003A Bonds, assuming compliance with certain tax covenants, interest on the Series 2003A Bonds from gross income for federal in come tax purposes under existing statutes, regulations, rulings and court decisions. Interest on the Series 2003A Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. However, see Tax Matters herein for a description of the federal alternative minimum tax on corporations and certain other federal tax consequences of ownership of the Bonds. Bond Counsel is further of the opinion that the Series 2003A Bonds and the interest thereon are exempt from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest, income or profits on debt obligations owned by corporations as defined in Chapter 220. Dated: February 15, 2003 CELEBRATION COMMUNITY DEVELOPMENT DISTRICT (Osceola County, Florida) $6,035,000 Special Assessment Bonds Series 2003A Due: May 1 (as shown below) The Celebration Community Development District Special Assessment Bonds, Series 2003A (the Series 2003A Bonds ) are issuable in fully registered form, without coupons, in denominations of $5,000 and integral multiples in excess thereof; provided, however, that the Series 2003A Bonds will be offered to initial purchasers only in aggregate principal amounts in excess of $100,000. The Series 2003A Bonds will bear interest at the fixed rates set forth on the inside cover hereof, calculated on the basis of a 360-day year comprised of twelve thirty-day months, payable semiannually on each May 1 and November 1, commencing May 1, The Series 2003A Bonds, when issued, will be registered in the name of Cede & Co., as bondowner and nominee for The Depository Trust Company ( DTC ), New York, New York. Purchases of beneficial interests in the Series 2003A Bonds will be made in book-entry only form. Accordingly, principal of and interest on the Series 2003A Bonds will be paid by SunTrust Bank, Orlando, Florida, as trustee (the Trustee ) directly to DTC as the registered owner thereof. Disbursements of such payments to the DTC Participants is the responsibility of DTC and disbursements of such payments to the beneficial owners is the responsibility of DTC Participants and the Indirect Participants, as more fully described herein. Any purchaser as a beneficial owner of a Series 2003A Bond must maintain an account with a broker or dealer who is, or acts through, a DTC Participant to receive payment of the principal of and interest on such Series 2003A Bond. See Description of the Bonds - Book-Entry Only System herein. The Series 2003A Bonds are being issued by the Celebration Community Development District (the District ) under and pursuant to the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended (the Act ) and a Master Trust Indenture, dated as of June 15, 1994 (the Master Indenture ), from the District to the Trustee, as amended and supplemented by an Seventh Supplemental Trust Indenture, dated as of February 15, 2003 (the Seventh Supplemental Indenture ), each from the District to the Trustee (the Master Indenture, as amended and supplemented is hereinafter referred to as the Indenture ). The Series 2003A Bonds are being issued for the purposes of financing the cost of acquiring, constructing and equipping a portion of certain assessable capital improvements comprising the development of South Village 2 of the community known as Celebration (the Development ) (as more particularly described herein, the 2003A Project ), to make a deposit into the Debt Service Reserve Account securing only the Series 2003A Bonds, paying costs of issuance, and funding capitalized interest with respect to the Series 2003A Bonds. The land within South Village 2 of Celebration is owned by St. Joe Residential Acquisitions Inc., a Florida corporation (the Landowner ) and is being developed by St. Joe/Arvida Company, L.P. ( Arvida or the Developer ). See The Landowner and the Developer herein. For a description of Celebration and the Arvida Development within Celebration, see The Development herein. The Series 2003A Bonds are separately, equally and ratably secured under the Indenture by a lien upon and pledge of the Pledged Revenues pledged to the Series 2003A Bonds (as more particularly defined in the Indenture) comprised primarily of special assessments upon land within the District specially benefitted by the 2003A Project funded with the proceeds of the Series 2003A Bonds (the 2003A Special Assessments ), together with certain moneys on deposit in the Funds and Accounts established under the Indenture for the benefit of the Series 2003A Bonds. The Series 2003A Bonds is subject to optional, extraordinary mandatory and mandatory sinking fund redemption prior to maturity at the times, upon the terms and conditions and at the redemption prices, as more fully described herein under the caption Description of the Series 2003A Bonds - Redemption Provisions. INVESTMENT IN THE SERIES 2003A BONDS IS NOT SUITABLE FOR ALL INVESTORS, POTENTIAL INVESTORS ARE SOLELY RESPONSIBLE FOR EVALUATING THE MERITS AND RISKS OF AN INVESTMENT IN THE SERIES 2003A BONDS. SEE SUITABILITY FOR INVESTMENT HEREIN. NEITHER THE SERIES 2003A BONDS NOR THE INTEREST AND PREMIUM, IF ANY, PAYABLE THEREON SHALL CONSTITUTE A GENERAL OBLIGATION OR GENERAL INDEBTEDNESS OF THE DISTRICT WITHIN THE MEANING OF THE CONSTITUTION AND LAWS OF FLORIDA. THE SERIES 2003A BONDS AND THE INTEREST AND PREMIUM, IF ANY, PAYABLE THEREON DO NOT CONSTITUTE EITHER A PLEDGE OF THE FULL FAITH AND CREDIT OF THE DISTRICT OR A LIEN UPON ANY PROPERTY OF THE DISTRICT OTHER THAN AS PROVIDED IN THE INDENTURE. NO OWNER OR ANY OTHER PERSON SHALL EVER HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY AD VALOREM TAXING POWER OF THE DISTRICT OR ANY OTHER PUBLIC AUTHORITY OR GOVERNMENTAL BODY, INCLUDING THE STATE OF FLORIDA OR OSCEOLA COUNTY, FLORIDA TO PAY THE PRINCIPAL OF, OR INTEREST AND PREMIUM, IF ANY, ON THE SERIES 2003A BONDS OR TO PAY ANY OTHER AMOUNTS REQUIRED TO BE PAID PURSUANT TO THE INDENTURE OR THE SERIES 2003A BONDS. RATHER, ALL SUCH AMOUNTS SHALL BE PAYABLE SOLELY FROM, AND SHALL BE SECURED SOLELY BY, THE TRUST ESTATE PLEDGED TO THE SERIES 2003A BONDS (AS DEFINED IN THE INDENTURE) ALL AS PROVIDED THEREIN. $6,035, % Term Bonds maturing May 1, at 100% CUSIP:151001DF8 (Plus Accrued Interest from February 15, 2003) The Series 2003A Bonds are offered for delivery when, as and if issued by the District and accepted by the Underwriter, subject to prior sale, withdrawal or modification of the offer without notice and the receipt of the opinion of legality by Greenberg Traurig, P.A., Miami, Florida, Bond Counsel, as to the validity of the Bonds and the excludability of interest thereon from gross income for federal income tax purposes. Certain legal matters will be passed upon for the Underwriter by their counsel Nabors, Giblin & Nickerson, P.A., Tampa, Florida; for the District by its counsel, Hopping Green & Sams, Professional Association, Tallahassee, Florida; and for the Trustee by its counsel, Holland & Knight LLP, Orlando, Florida. It is expected that the Bonds will be delivered in book-entry form through the facilities of The Depository Trust Company, New York, New York on or about February 27, February 19, 2003 PRAGER, SEALY & CO., LLC

2 CELEBRATION COMMUNITY DEVELOPMENT DISTRICT BOARD OF SUPERVISORS Hal McIntyre, Chairman Linda Goodwin-Nichols, Vice Chair Steven D. Katz, Secretary Eva Tukdarian David Muenks DISTRICT MANAGER Severn Trent Services, Inc. DISTRICT COUNSEL Hopping Green & Sams, Professional Association Tallahassee, Florida BOND COUNSEL Greenberg Traurig, P.A. Miami, Florida COUNSEL TO THE UNDERWRITER Nabors, Giblin & Nickerson, P.A. Tampa, Florida DISTRICT ENGINEERS PBS&J Orlando, Florida FINANCIAL CONSULTANT Rizzetta & Company, Incorporated Tampa, Florida

3 No dealer, broker, salesperson or other person has been authorized by the Celebration Community Development District or the Underwriter to give any information or to make any representations, other than those contained in this Limited Offering Memorandum, and, if given or made, such other information or representations must not be relied upon as having been authorized thereby. This Limited Offering Memorandum does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Limited Offering Memorandum nor any sale made hereunder shall, under any circumstances, create any implication that there has beennochange in the affairs of the Celebration Community Development District since the date hereof. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. Table of Contents Page Introduction...1 Description of the Series 2003A Bonds...4 General Description...4 Redemption Provisions of The Series 2003A Bonds...5 Notice of Redemption...7 Acceleration...8 Book-Entry Only System...8 Flow of Funds...10 Security for and Source of Payment of the Series 2003A Bonds...13 General...13 No Additional Bonds; Parity Liens of Other Assessments and Taxes...14 Overlapping Assessments...14 Enforcement and Collection of Assessments...14 Prepayment of Assessments...18 Adjustments to Assessments...18 Assessment Methodology...19 Reserve Account in the Debt Service Reserve Fund...20 The 2003A Project...20 General...20 Permits and Approvals...22 Repayment of Certain Obligations to the Developer...22 Page Estimated Sources and Uses of Funds...23 Principal and Interest Requirements Series 2003A Bonds...24 The District...25 General Information...25 Powers...25 Board of Supervisors...25 The District Manager...26 Outstanding Bonds...27 The Arvida Development Within Celebration...28 The Landowner and the Developer...33 Bondholders' Risks...37 Suitability for Investment...40 Tax Matters...40 Agreement by the State...41 Legality for Investment...42 Disclosure Required by Florida Blue Sky Regulations...42 Continuing Disclosure...42 i

4 Page Enforceability of Remedies...43 Litigation...43 Absence of Ratings...43 Underwriting...43 Experts...44 Validation...44 Legal Matters...44 Miscellaneous...45 Appendices: Appendix A - Appendix B - Appendix C - Appendix D - Appendix E - Appendix F - Engineering Report Forms of Master Indenture and Supplemental Indenture Form of Opinion of Bond Counsel Form of Continuing Disclosure Agreement Special Assessment Allocation Report Audited Financial Statements of the District for the year ended September 30, 2001 ii

5 Limited Offering Memorandum CELEBRATION COMMUNITY DEVELOPMENT DISTRICT (Osceola County, Florida) $6,035,000 Special Assessment Bonds Series 2003A Introduction The purpose of this Limited Offering Memorandum, including the cover page and appendices hereto, is to set forth certain information concerning the Celebration Community Development District (the "District"), in connection with the offering and issuance of its Celebration Community Development District Special Assessment Bonds, Series 2003A (the "Series 2003A Bonds"). The District was created pursuant to the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended (the "Act"), as a community development district. The Series 2003A Bonds are being issued by the District under and pursuant to the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended (the "Act") and a Master Trust Indenture, dated as of June 15, 1994 (the "Master Indenture"), from the District to the Trustee, as amended and supplemented by a Seventh Supplemental Trust Indenture, dated as of February 15, 2003 (the "Seventh Supplemental Indenture"), each from the District to the Trustee (the Master Indenture, as amended and supplemented is hereinafter referred to as the "Indenture"). The District was established by Rule 42Q, adopted by the Florida Land and Water Adjudicatory Commission (the "Commission") on March 8, 1994 and effective on March 29, 1994, under the provisions of the Act for the purposes of financing and managing the planning, acquisition, construction, maintenance and operation of a portion of the infrastructure necessary for community development in a portion of Celebration, a planned community being developed in Osceola County, Florida ("Celebration") by The Celebration Company ("The Celebration Company"), a wholly-owned subsidiary of The Walt Disney Company. The District occupies approximately 6,548 acres. Celebration has received development approval to construct up to 8,065 apartments, townhouses and single family homes as well as commercial buildings contiguous to the Walt Disney World Resort over its anticipated development period. Community development activities within Celebration are shared with Enterprise Community Development District (the "Enterprise District"), a community development district established pursuant to the Act by Rule 42R, also adopted by the Commission on March 8, 1994 and effective on March 29, The Act authorizes the District to issue bonds for the purpose, among others, of financing, funding, planning, establishing, acquiring, constructing or reconstructing, enlarging or extending, equipping, operating and maintaining water management, water supply,

6 sewer, wastewater management, bridges or culverts, district roads, street lights and any other basic infrastructure projects within or without the boundaries of the District. The Series 2003A Bonds are being issued for the purposes of financing and refinancing the cost of acquiring, constructing and equipping a portion of certain assessable capital improvements comprising the development of Phase V/South Village 2 ("PhaseV/South Village 2" or "South Village2") of the community known as "Celebration" (the "Development") (as more particularly described herein, the "2003A Project"), to make a deposit into the Debt Service Reserve Account securing only the Series 2003A Bonds, paying costs of issuance, and funding capitalized interest with respect to the Series 2003A Bonds. The land within South Village 2 of Celebration is owned by St. Joe Residential Acquisitions Inc., a Florida corporation (the "Landowner") and is being developed by St. Joe/Arvida Company, L.P. ("Arvida" or the "Developer"). See "The Landowner and the Developer" herein. For a description of Celebration and the Arvida Development within Celebration, see "The Development" herein. The Series 2003A Bonds are separately, equally and ratably secured under the Indenture by a lien upon and pledge of the Pledged Revenues pledged to the Series 2003A Bonds (as more particularly defined in the Indenture) comprised primarily of special assessments upon land within the District specially benefitted by the 2003A Project funded with the proceeds of the Series 2003A Bonds (the "2003A Special Assessments"), together with certain moneys on deposit in the Funds and Accounts established under the Indenture for the benefit of the Series 2003A Bonds. Except as provided in the Indenture, no additional bonds or other obligations may be issued on parity with the Series 2003A Bonds or have a senior lien on the Series 2003A Assessments pledged thereto and other assets pledged under the Indenture as security for the Series 2003A Bonds (see "Security for and Source of Payment of Bonds," herein). ALTHOUGH THE LIEN AND THE PROCEEDS OF THE ASSESSMENTS PLEDGED TO THE SERIES 2003A BONDS ARE PLEDGED EXCLUSIVELY TO THE SERIES 2003A BONDS, THE LIEN OF THE SERIES 2003A ASSESSMENTS MAY BE ON THE SAME PROPERTY AS, AND THEREFORE OVERLAP AND BE CO-EQUAL WITH, THE LIEN OF FUTURE ASSESSMENTS RELATED AND PLEDGED TO OTHER SERIES OF BONDS HEREAFTER ISSUED BY THE DISTRICT TO FINANCE THE BALANCE OF THE COSTS OF THE ASSESSABLE CAPITAL IMPROVEMENTS COMPRISING THE DEVELOPMENT OF PHASE V/SOUTH VILLAGE 2 NOT FINANCED WITH THE PROCEEDS OF THE SERIES 2003A BONDS (HEREINAFTER DESCRIBED) AND THE LIENS OF OTHER ASSESSMENTS WHICH MAY BE IMPOSED BY OSCEOLA COUNTY, FLORIDA OR OTHER UNITS OF LOCAL GOVERNMENT HAVING ASSESSMENT POWERS WITHIN THE DISTRICT AND WILL ALSO BE CO-EQUAL WITH THE LIEN OF SUCH DISTRICT, COUNTY, SCHOOL DISTRICT AND MUNICIPAL AD VALOREM TAXES AND ASSESSMENTS (see the information under the subcaptions "Enforcement and Collection of Assessments" and "Overlapping Assessments" under the principal caption "Security for and Source of Payment of the Series 2003A Bonds"). 2

7 The Series 2003A Bonds are the seventh Series of Bonds to be issued under the Master Indenture. For a summary of other Outstanding Bonds of the District see, the material appearing under the caption "The District - Outstanding Bonds" herein. The Series 2003A Bonds are payable from and secured by special assessments on property specially benefitted by the respective projects financed by the Series 2003A Bonds. All capitalized terms used in this Limited Offering Memorandum that are defined in the Indenture and not defined herein shall have the respective meanings set forth in the Indenture, the form of which appears as Appendix B hereto. Investment in the 2003A Bonds involve certain risks. See "BONDHOLDERS' RISKS" and "SUITABILITY FOR INVESTMENT" herein. Pursuant to Florida law, this offering is limited by the Underwriter to "accredited investors" within the meaning of the rules of the Florida Department of Banking and Finance. This limitation of the initial offering to accredited investors does not denote restrictions on transfer in any secondary market for the Series 2003A Bonds. Potential investors are solely responsible for evaluating the merits and risks of an investment in the Series 2003A Bonds. See "SUITABILITY FOR INVESTMENT" herein. There follows in this Limited Offering Memorandum a brief description of the District, the 2003A Project to be planned, acquired, financed, constructed and equipped with the proceeds of the Series 2003A Bonds, together with summaries of the terms of the Series 2003A Bonds, the Indenture and certain provisions of the Act. All references herein to the Indenture and the Act are qualified in their entirety by reference to such documents and all references to the Series 2003A Bonds are qualified by reference to the definitive forms thereof and the information with respect thereto contained in the Indenture, the form of which appears as Appendix B hereto. The information herein under the caption "Celebration" has been furnished specifically for inclusion herein by the District Engineer, the Landowner and the Developer without independent investigation by the District or the Underwriter, and neither the District nor the Underwriter makes any representation or warranty concerning the accuracy or completeness of such information. Neither The Landowner, the Developer nor any of their respective affiliates makes any representation or warranty as to the accuracy or completeness of information contained herein which has been furnished by any other party to the transactions contemplated hereby. This Limited Offering Memorandum, is not, and shall not be deemed to constitute, an offer to sell, or the solicitation of an offer to buy, real estate, which may only be made pursuant to offering documents satisfying applicable federal and state laws relating to the offer and sale of real estate. 3

8 Description of the Series 2003A Bonds General Description The Series 2003A Bonds are issuable as fully registered Series 2003A Bonds in book-entry only form (see "Description of the Series 2003A Bonds - Book-Entry Only System"), without coupons, in the denomination of $5,000 or any integral multiple thereof. The Series 2003A Bonds will be dated February 15, 2003, and, will bear interest from the Interest Payment Date next preceding their date of registration and authentication, unless any such Series 2003A Bond is registered and authenticated as of an Interest Payment Date, in which case it will bear interest from such Interest Payment Date, or unless a Series 2003A Bond is registered and authenticated prior to the first Interest Payment Date, in which event such Series 2003A Bond will bear interest from its dated date, provided, however, that if a Bond is authenticated between a record date and the next succeeding Interest Payment Date, such Bond will bear interest from such succeeding Interest Payment Date, or unless, as shown by the records of the Trustee, interest on the Series 2003A Bonds is in default in which event such Series 2003A Bond will bear interest from the date to which interest was last paid on such Series 2003A Bond to maturity or earlier redemption. The Series 2003A Bonds will be initially issued in the form of a separate single certificated fully registered Series 2003A Bond for each maturity. Upon initial issuance, the ownership of each such Series 2003A Bond will be registered in the registration books kept by the Trustee in the name of Cede & Co., as Nominee of The Depository Trust Company, New York, New York ("DTC"), the initial Bond Depository. All of the Outstanding Series 2003A Bonds will be registered in the registration books kept by the Trustee in the name of Cede & Co., as Nominee of DTC (see "Description of the Series 2003A Bonds - Book-Entry Only System"). With respect to Series 2003A Bonds registered in the registration books kept by the Trustee in the name of Cede & Co., as Nominee of DTC, the District, the Trustee and the Paying Agent will have no responsibility or obligation to any DTC Participant (hereinafter defined) or to any indirect DTC Participant. Without limiting the immediately preceding sentence, the District, the Trustee and the Paying Agent will have no responsibility or obligation with respect to: (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Series 2003A Bonds; (ii) the delivery to any DTC Participant or any other person other than a Bondholder, as shown in the registration books kept by the Trustee, of any notice with respect to the Series 2003A Bonds, including any notice of redemption; or (iii) the payment to any DTC Participant or any other person, other than a Bondholder, as shown in the registration books kept by the Trustee, of any amount with respect to principal of, premium, if any, or interest on the Series 2003A Bonds. The District, the Trustee and the Paying Agent may treat and consider the person in whose name each Series 2003A Bond is registered in the registration books kept by the Trustee as the holder and absolute owner of such Series 2003A Bond for the purpose of payment of principal of, premium, if any, and interest with respect to such Series 2003A Bond, for the purpose of giving notices of redemption and other matters with respect to such Series 2003A Bond, for the purpose of registering transfers with respect to such Series 2003A Bond, and for all other purposes whatsoever. The Paying Agent will pay all principal of and premium, if any, and interest on the 4

9 Series 2003A Bonds only to or upon the order of the respective Bondholders, as shown in the registration books kept by the Trustee, or their respective attorneys duly authorized in writing, as provided in the Indenture, and all such payments will be valid and effective to fully satisfy and discharge the District's obligations with respect to payment of principal of, premium, if any, and interest on the Series 2003A Bonds to the extent of the sum or sums so paid. No person other than a Bondholder, as shown in the registration books kept by the Trustee, will receive a certificated Series 2003A Bond evidencing the obligation of the District to make payments of principal, premium, if any, and interest pursuant to the provisions of the Indenture. Redemption Provisions of The Series 2003A Bonds Mandatory Redemption of Series 2003A Bonds. The Series 2003A Bonds maturing on May 1, 2034, are subject to mandatory sinking fund redemption on May 1 in the respective years set forth in the following table, at a Redemption Price of 100% of the principal amount thereof plus accrued interest to the redemption date. * Maturity May 1 Amortization May 1 Amortization of the Year Installment of the Year Installment 2005 $70, $180, , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 * In connection with such mandatory sinking fund redemption of Series 2003A Bonds, amounts shall be transferred from the 2003A Revenue Account of the Revenue Fund to the 2003A Sinking Fund Account of the Debt Service Fund, as provided in the Indenture. 5

10 Adjustment of Sinking Fund Installments of a Series. The principal amounts specified in the foregoing table of Sinking Fund Installments will be adjusted as specified by the District by any principal amounts of the Series 2003A Bonds redeemed pursuant to, or purchased as permitted by, the Indenture. Upon any redemption of Series 2003A Bonds other than in accordance with scheduled Sinking Fund Installments, the District shall cause to be recalculated and delivered to the Trustee revised Sinking Fund Installments recalculated so as to amortize the Outstanding principal amount of Series 2003A Bonds in substantially equal annual installments of principal and interest (subject to rounding to Authorized Denominations of principal) over the remaining term of the Series 2003A Bonds. The Sinking Fund Installments as so recalculated shall not result in an increase in the aggregate of the Sinking Fund Installments for Series 2003A Bonds in any year. Optional Redemption of Series 2003A Bonds. The Series 2003A Bonds maturing after May 1, 2013, may, at the option of the District, be called for redemption as a whole, at any time, or in part on the first day of any month on or after May 1, 2013 (less than all of such Series 2003A Bonds of such maturity to be selected by the District), at the redemption prices (expressed as percentages of principal amount) set forth in the following table plus accrued interest from the most recent Interest Payment Date to the redemption date: Redemption Periods Redemption (Dates Inclusive) Prices May 1, 2013 through April 30, % May 1, 2014 and thereafter 100 Extraordinary Mandatory Redemption of Series 2003A Bonds in Whole or in Part. The Bonds are subject to extraordinary mandatory redemption prior to maturity by the District in whole, on any date, or in part, on the first day of any month, at an extraordinary mandatory redemption price equal to 100% of the principal amount of the Bonds to be redeemed, plus interest accrued to the redemption date, (i) from Series 2003A Prepayment Principal deposited into the Series 2003A Bond Redemption Fund following the payment in whole or in part of Series 2003A Special Assessments on any portion of the District Lands benefited by the Series 2003A Project in accordance with the provisions of the Indenture; (ii) from excess moneys in the 2003A Construction Account of the Construction Fund transferred to the 2003A Bond Redemption Fund pursuant to the provisions of the Indenture after completion of the 2003A Project, as evidenced by the certificate of the Consulting Engineer and District Manager required by the provisions of the Indenture; (iii) from moneys, if any, on deposit in the 2003A Bond Redemption Fund pursuant to the provisions of the Indenture following the damage or destruction of all or substantially all of the 2003A Project to such extent that, in the reasonable opinion of the District, the repair and restoration thereof would not be economical or would be impracticable; provided, however, that at least forty-five (45) days prior to such extraordinary mandatory redemption, the District shall cause to be delivered to the Trustee (x) notice setting forth the redemption date and (y) a certificate of the Consulting Engineer confirming that the repair and restoration of the 2003A Project would not be economical or would 6

11 be impracticable;(iv) following condemnation or the sale of any portion of the 2003A Project to a governmental entity under threat of condemnation by such governmental entity and the payment of moneys by such governmental entity to the Trustee for deposit into the 2003A Bond Redemption Fund pursuant to the provisions of the Indenture in order to effectuate such redemption. Monies for the Extraordinary Mandatory Redemption of Series 2003A Bonds shall be deposited in the Prepayment Account of the 2003A Bond Redemption Fund, upon delivery to the Trustee of a certificate of the District Manager (i) setting forth the amounts and maturities of the Series 2003A Bonds which are to be redeemed, (ii) containing cash flows demonstrating that, after giving effect to the Extraordinary Mandatory Redemption of Series 2003A Bonds in the amounts and maturities set forth in the Indenture as described in clause (i) above, and after giving effect to the reamortization of Series 2003A Term Bonds in accordance with the provisions of the Indenture, the Series 2003A Pledged Revenues to be received by the District in the current and each succeeding Bond Year will be sufficient to pay, when due, the principal, Maturity Amount and Amortization Installments of and interest on the remaining Outstanding Series 2003A Bonds. On each March 15 and September 15 (or, if such date is not a Business Day, on the Business Day next preceding such day), the Trustee is required to determine the amount on deposit in the 2003A Bond Redemption Fund, and, if the balance therein is greater than zero, transfer from the 2003A Revenue Account for deposit in the 2003A Bond Redemption Fund an amount sufficient to increase the amount on deposit therein to an integral multiple of $5,000 and thereupon give notice and cause the extraordinary mandatory redemption of such Series 2003A Bonds on the next succeeding Interest Payment Date in the maximum aggregate principal amount for which monies are then on deposit in such Bond Redemption Fund in accordance with the provisions for extraordinary redemption of such Series 2003A Bonds. Not less than $100,000 aggregate principal amount of Series 2003A Bonds need be called for extraordinary mandatory redemption at one time It is not anticipated that the Landowner will prepay the Series 2003A Special Assessments. Notice of Redemption Notice of each redemption of Series 2003A Bonds is required to be mailed by the Trustee, postage prepaid, not less than thirty (30) nor more than sixty (60) days prior to the Redemption Date to the District and each registered Owner of Series 2003A Bonds to be redeemed at the address of such registered Owner recorded on the bond register maintained by the Registrar on the fifth (5 th ) day prior to such mailing. On the date designated for redemption, notice having been given and money for the payment of the Redemption Price being held by the Trustee, all as provided in the Indenture, the Series 2003A Bonds or such portions thereof so called for redemption will become and be due and payable at the Redemption Price provided for the redemption of such Series 2003A Bonds or such portions thereof on such date, interest on such Series 2003A Bonds or such portions thereof so called for redemption will cease to accrue, such Series 2003A Bonds or such portions thereof so called for redemption will cease to be secured under the Indenture and the Owners thereof will have no rights in respect of such Series 2003A Bonds or such portions thereof so called for 7

12 redemption except to receive payments of the Redemption Price thereof so held by the Trustee. Further notice of redemption will be given by the Trustee to certain registered securities depositories and information services as set forth in the Indenture, but no defect in said further notice nor any failure to give all or any portion of such further notice will in any manner defeat the effectiveness of a call for redemption if notice thereof is given as described above. Acceleration The Indenture does not permit the acceleration of the principal of the Series 2003A Bonds upon the occurrence of an Event of Default thereunder. Book-Entry Only System The Series 2003A Bonds will be available in book-entry form only, in the principal amount of $5,000 or any integral multiple thereof. Purchasers of Series 2003A Bonds will not receive certificates representing their interests in the Series 2003A Bonds purchased. The Underwriter will confirm original issuance purchases with statements containing certain terms of the Series 2003A Bonds purchased. The Series 2003A Bonds will be held by DTC as securities depository. The ownership of one fully registered Series 2003A Bond for each maturity as set forth on the cover page hereof, in the aggregate principal amount of the issue, will be registered in the name of Cede & Co. as nominee for DTC. DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold securities of its participants ("DTC Participants") and to facilitate the clearance and settlement of securities transactions among DTC Participants in such securities through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, certain of which own DTC either directly or through their representatives. Access to the DTC system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant. Purchases of the Series 2003A Bonds may be made by or through brokers and dealers who are, or act through, DTC Participants. Such DTC Participants and the persons for whom they acquire interests in the Series 2003A Bonds as nominees will not receive certificated bonds, but each DTC Participant will receive a credit balance in the records of DTC in the amount of such DTC Participant's interest in the Series 2003A Bonds, which will be confirmed in accordance with DTC's standard procedures. The ownership interest of the actual purchaser of each Series 2003A Bond (the "Beneficial Owner") will be recorded in the records of the DTC Participant. DTC Participants are required to provide Beneficial Owners with a written confirmation of their purchase containing details of the acquired Series 2003A Bonds. Transfers of ownership interests in the Series 2003A 8

13 Bonds will be accomplished by book entry made by DTC and by the DTC Participants who act on behalf of the Beneficial Owners. The Trustee will make payments of principal of, premium, if any, and interest on the Series 2003A Bonds to DTC or its nominee, Cede & Co., as registered owner of the Series 2003A Bonds. The current practice of DTC is to credit the accounts of the DTC Participants immediately upon receipt of monies in accordance with their respective holdings as shown on the records of DTC. Payments by DTC Participants to Beneficial Owners will be in accordance with standing instructions and customary practices such as those which are now in effect for municipal securities held by DTC Participants in bearer form or registered in "street name" for the accounts of customers, and will be the responsibility of DTC Participants and not the responsibility of DTC, the Trustee or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. The Trustee will send any notice of redemption or other notice only to DTC. Any failure of DTC to advise any DTC Participant, or of any DTC Participant to notify the Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of the Series 2003A Bonds called for redemption or of any other action premised on such notice. Redemption of portions of any maturity of the Series 2003A Bonds will reduce the outstanding principal amount of such maturity held by DTC. In such event, DTC may implement, through its book-entry system, a redemption of Series 2003A Bonds held for the account of DTC Participants in accordance with its own rules or other agreements with DTC Participants, and then DTC Participants may implement a redemption of Series 2003A Bonds for the Beneficial Owners. NEITHER THE DISTRICT NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, OR THE PERSONS FOR WHOM DTC PARTICIPANTS ACT AS NOMINEES WITH RESPECT TO THE SERIES 2003A BONDS, THE ACCURACY OF RECORDS OF DTC, CEDE & CO. OR ANY DTC PARTICIPANT OR THE PROVIDING OF NOTICE OR PAYMENT TO DTC PARTICIPANTS OR BENEFICIAL OWNERS, OR THE SELECTION OF SERIES 2003A BONDS FOR REDEMPTION. The District and the Trustee cannot give any assurances that DTC, DTC Participants or others will distribute payments of principal of, premium, if any, and interest on the Series 2003A Bonds paid to DTC or its nominee, or any redemption or other notices to the Beneficial Owners, or that they will do so on a timely basis or that DTC will serve or act in a manner described in this Limited Offering Memorandum. For every transfer and exchange of the Series 2003A Bonds, the Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other government charge that may be imposed in relation thereto. DTC may determine to discontinue providing its services with respect to the Series 2003A Bonds at any time by giving notice to the District and the Trustee and discharging its responsibilities with respect thereto under applicable law. In addition, the District may determine to discontinue the 9

14 use of book-entry transfers through DTC (or any successor securities depository). Under such circumstances, certificated Series 2003A Bonds are required to be delivered as described in the Indenture. In the event that the book-entry only system is discontinued, the following provisions will govern the transfer and exchange of Series 2003A Bonds. Series 2003A Bonds will be exchanged for an equal aggregate principal amount of corresponding Series 2003A Bonds in other authorized denominations and of the same maturity ("Replacement Bonds"), upon surrender thereof at the principal corporate trust office of the Trustee. The transfer of any Series 2003A Bond will be registered on the books maintained by the Trustee for such purpose only upon the surrender thereof to the Trustee with a duly executed instrument of transfer or authorization for exchange in a form satisfactory to the Trustee. For every exchange or transfer of registration of Series 2003A Bonds, the District and the Trustee may impose a charge sufficient to reimburse them for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer, but no other charge may be made to the Beneficial Owner for any exchange or registration of transfer of the Series 2003A Bonds. The Trustee will not be required to transfer or exchange (i) any Series 2003A Bond during a period beginning at the opening of business fifteen (15) days preceding an Interest Payment Date or fifteen days (15) preceding the mailing of a notice of redemption of the Series 2003A Bonds selected for redemption and ending at the close of business on the Interest Payment Date or the day of such mailing, respectively, or (ii) any Series 2003A Bond selected for redemption in whole or in part. Flow of Funds The Indenture establishes with the Trustee a Revenue Fund and pursuant to the Seventh Supplemental Indenture a separate Account therein for the Series 2003A Bonds designated the 2003A Revenue Account, into which the Trustee is required to immediately deposit any and all Series 2003A Special Assessments received from the levy thereof on the District Lands or any portion thereof (other than Prepayments) for the payment of the Series 2003A Bonds and other sums coming due under, or pursuant to the Indenture relating to the Series 2003A Bonds (unless such Series 2003A Special Assessments and/or other payments are specifically designated by the District for deposit into the Rebate Fund or any other Fund or Account established under the Indenture). The 2003A Revenue Account in the Revenue Fund is required to be held by the Trustee separate and apart from all other Funds and Accounts held under the Indenture and from all other monies of the Trustee to secure the Series 2003A Bonds. On the Business Day preceding each Interest Payment Date, commencing on the Business Day preceding May 1, 2003, the Trustee is required to transfer from amounts on deposit in the 2003A Revenue Account in the Revenue Fund to the Funds and Accounts designated below, the following amounts in the following order of priority: FIRST, to the 2003A Interest Account of the Debt Service Fund, an amount equal to the amount of interest payable on the Series 2003A Bonds then Outstanding on such May 1, less any amount already on deposit in the 2003A Interest Account not previously credited; 10

15 SECOND, to the 2003A Principal Account of the Debt Service Fund, an amount, if any, equal to the principal amount of the Series 2003A Bonds maturing on such May 1, less any amount already on deposit in the 2003A Principal Account not previously credited; THIRD, beginning on the date set forth in the Seventh Supplemental Indenture, and each May 1 thereafter, to the 2003A Sinking Fund Account of the Debt Service Fund, an amount, if any, equal to the principal amount of such Series 2003A Bonds subject to mandatory sinking fund redemption on such May 1, less any amount already on deposit in the 2003A Sinking Fund Account not previously credited; FOURTH, to the 2003A Interest Account of the Debt Service Fund, an amount equal to the amount of interest payable on the Series 2003A Bonds then Outstanding on the next succeeding Interest Payment Date, less any amount already on deposit in the 2003A Interest Account not previously credited; and FIFTH, to the Series 2003A Account of the Debt Service Reserve Fund, the amount necessary in order to restore the balance in the 2003A Account in the Debt Service Reserve Fund to the Series 2003A Debt Service Reserve Requirement; and SIXTH, to such other Fund or Account as may be specified in the Seventh Supplemental Indenture, as described below. The Seventh Supplemental Indenture establishes a 2003A Bond Redemption Fund for the Series 2003A Bonds and therein a General Account, a Prepayment Account and an Insurance and Condemnation Proceeds Account. The Seventh Supplemental Indenture requires that the Trustee within ten (10) Business Days after the last Interest Payment Date in any calendar year, at the direction of a Responsible Officer, withdraw any monies held for the credit of the Series 2003A Revenue Fund which are not otherwise required to be deposited pursuant to the Indenture and deposit such monies as directed to the credit of the Series 2003A Bond Redemption Fund in accordance with the provisions of the Seventh Supplemental Indenture. Prepayments relating to the Series 2003A Bonds are required to be deposited upon receipt by the Trustee into the 2003A Prepayment Account. Excess monies in the 2003A Construction Account of the Construction Fund are required to be deposited into the 2003A Prepayment Account upon completion of the 2003A Project, as evidenced by a certificate of the Consulting Engineer and District Manager. Monies on deposit on the Capitalized Interest Termination Date in the 2003A Interest Account of the Debt Service Fund representing capitalized interest on the Series 2003A Bonds are required to be deposited into the 2003A Construction Account of the Construction Fund; provided, however, that prior to such transfer, the District Manager is required to certify to the Trustee that the Series 2003A Pledged Revenues will be sufficient to pay interest on the Series 2003A Bonds on the next two (2) succeeding Interest Payment Dates. Insurance or condemnation proceeds received with respect to the 2003A Project, to the extent such proceeds are not to be used to replace or restore such 2003A Project, are required to be deposited in the Series 2003A Insurance and Condemnation Proceeds Account. Monies in the Series 2003A Revenue Fund on November 11

16 1 of each calendar year after payment in full of interest and principal on the Series 2003A Bonds due and payable in such calendar year are to be deposited in the Series 2003A General Account. Monies in any Account in the 2003A Bond Redemption Fund (including all earnings on investments held therein) are required to be accumulated therein to be used in the following order of priority, to the extent that the need therefor arises: From the General Account: FIRST, to make such deposits into the Rebate Fund as the District may direct in accordance with the Arbitrage Rebate Certificate, such monies thereupon to be used solely for the purposes specified in the Arbitrage Rebate Certificate. Any monies so transferred from the 2003A Bond Redemption Fund to the Rebate Fund will thereupon be free from the lien and pledge of the Indenture; and SECOND, the remainder to be utilized by the Trustee, to be used for any lawful purpose, including, without limitation, to call for redemption on the first day of each month on which Series 2003A Bonds are subject to optional redemption, such amount of Series 2003A Bonds as, with the redemption premium, may be practicable; and From an Insurance and Condemnation Proceeds Account: FIRST, to be deposited in the 2003A Construction Account of the Construction Fund in the amount necessary to make up for any deficiency in the amount of insurance proceeds or condemnation awards received, in the event that after any damage or destruction or taking of the 2003A Project or a portion thereof and a decision by the District to repair, rebuild, replace or restore such 2003A Project, the amount of insurance proceeds or condemnation awards received, together with the amounts already on deposit in the 2003A Construction Account of the Construction Fund is insufficient to pay for such repair, rebuilding, replacement or restoration of the damaged, destroyed or taken portion of the 2003A Project; and SECOND, to be utilized by the Trustee to call for extraordinary mandatory redemption Series 2003A Bonds as specified in the Indenture in an amount equal to the amount of money transferred to the Series 2003A Insurance and Condemnation Proceeds Account of the 2003A Bond Redemption Fund pursuant to such redemption provisions; and From the Prepayment Account, to be utilized by the Trustee to call for extraordinary mandatory redemption of Series 2003A Bonds in an amount equal to the amount of money deposited in the Prepayment Account of the 2003A Bond Redemption Fund. Any such redemption shall be made in accordance with the provisions of the Master Indenture and the District will pay all expenses in connection with such redemption. 12

17 Security for and Source of Payment of the Series 2003A Bonds General The Series 2003A Bonds are secured equally and ratably by a first lien upon and pledge of the Series 2003A Pledged Revenues, which are defined in the Indenture to mean with respect to the Series 2003A Bonds (a) all revenues received by the District from Series 2003A Special Assessments levied and collected on the District Lands benefited by the 2003A Project, including, without limitation, amounts received from any foreclosure proceeding for the enforcement of collection of such Series 2003A Special Assessments or from the issuance and sale of tax certificates with respect to such Series 2003A Special Assessments, and (b) all moneys on deposit in the Funds and Accounts established under the Indenture; provided, however, that Pledged Revenues shall not include (A) any moneys transferred to the Rebate Fund, or investment earnings thereon and (B) "special assessments" levied and collected by the District under Section of the Act for maintenance purposes or "maintenance special assessments" levied and collected by the District under Section (3) of the Act (it being expressly understood that the lien and pledge of the Indenture shall not apply to any of the moneys described in the foregoing clauses (A) and (B) of this proviso). The Series 2003A Bonds are additionally secured by amounts on deposit in the Funds and Accounts, other than the Rebate Fund, created pursuant to the Indenture for the 2003A Bonds and amounts on deposit in the Debt Service Reserve Fund relating to the Series 2003A Bonds (See " Security for and Source of Payment of the Series 2003A Bonds - Reserve Account in the Debt Service Reserve Fund"). THE SERIES 2003A BONDS AUTHORIZED UNDER THE INDENTURE AND THE OBLIGATION EVIDENCED THEREBY SHALL NOT CONSTITUTE A LIEN UPON ANY PROPERTY OF THE DISTRICT, INCLUDING, WITHOUT LIMITATION, THE SERIES 2003A PROJECT OR ANY PORTION THEREOF IN RESPECT OF WHICH ANY SUCH BONDS ARE BEING ISSUED, OR ANY PART THEREOF, BUT SHALL CONSTITUTE A LIEN ONLY ON THE SERIES 2003A PLEDGED REVENUES AS SET FORTH IN THE INDENTURE. NOTHING IN THE SERIES 2003A BONDS AUTHORIZED UNDER THE INDENTURE OR IN THE INDENTURE SHALL BE CONSTRUED AS OBLIGATING THE DISTRICT TO PAY THE SERIES 2003A BONDS OR THE REDEMPTION PRICE THEREOF OR THE INTEREST THEREON EXCEPT FROM THE SERIES 2003A PLEDGED REVENUES, OR AS PLEDGING THE FAITH AND CREDIT OF THE DISTRICT, THE CITY, THE COUNTY OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, OR AS OBLIGATING THE DISTRICT, THE CITY, THE COUNTY OR THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS, DIRECTLY OR INDIRECTLY OR CONTINGENTLY, TO LEVY OR TO PLEDGE ANY FORM OF TAXATION WHATEVER THEREFOR. 13

18 No Additional Bonds; Parity Liens of Other Assessments and Taxes Pursuant to the Indenture, the District has covenanted that the Pledged Revenues pledged to the Series 2003A Bonds are not and will not be subjected to any other lien senior to or on a parity with the lien created in favor of the Series 2003A Bonds and any Additional Bonds (to the extent permitted in the Indenture), any Credit Facility Issuer and any Liquidity Facility Issuer permitted under the Master Indenture. ALTHOUGH THE LIEN AND THE PROCEEDS OF THE ASSESSMENTS PLEDGED TO THE SERIES 2003A BONDS ARE PLEDGED EXCLUSIVELY TO THE SERIES 2003ABONDS, THE LIEN OF THE SERIES 2003A ASSESSMENTS MAY BE ON THE SAME PROPERTY AS, AND THEREFORE OVERLAP AND BE CO-EQUAL WITH, THE LIEN OF FUTURE ASSESSMENTS RELATED AND PLEDGED TO OTHER SERIES OF BONDS HEREAFTER ISSUED BY THE DISTRICT TO FINANCE THE BALANCE OF THE COSTS OF THE ASSESSABLE CAPITAL IMPROVEMENTS COMPRISING THE DEVELOPMENT OF PHASE V/SOUTH VILLAGE 2 NOT FINANCED WITH THE PROCEEDS OF THE SERIES 2003A BONDS (HEREINAFTER DESCRIBED) AND THE LIENS OF OTHER ASSESSMENTS WHICH MAY BE IMPOSED BY OSCEOLA COUNTY, FLORIDA OR OTHER UNITS OF LOCAL GOVERNMENT HAVING ASSESSMENT POWERS WITHIN THE DISTRICT AND WILL ALSO BE CO-EQUAL WITH THE LIEN OF SUCH DISTRICT, COUNTY, SCHOOL DISTRICT AND MUNICIPAL AD VALOREM TAXES AND NON AD VALOREM ASSESSMENTS (see "Overlapping Assessments" and "Enforcement and Collection of Assessments"). Overlapping Assessments The Series 2003A Bonds will fund only a portion of the cost of the public infrastructure needed for the complete development of Phase V/South Village 2. The Developer will enter into a funding agreement with the District, pursuant to which the Developer will advance funds to the District with which to construct the balance of such public infrastructure, with such advances to be repaid from the proceeds of future Series of Bonds, if, as and when issued. It is anticipated that the District may in the future issue future Series of Bonds to fund all or a portion of such advances and/or the costs of such public infrastructure. Such future Series of Bonds would be payable from and secured by Special Assessments which, pursuant to the Assessment Methodology, will be levied on lands securing the Series 2003A Bonds and such Special Assessments will therefore overlap and be co-equal with, the lien of the Series 2003A Assessments and other assessments which may be imposed by the District, Osceola County, Florida or other units of local government having assessment powers within the District, and will also be co-equal with the lien of County, school district and municipal ad valorem taxes. Enforcement and Collection of Assessments The primary source of payment for the Series 2003A Bonds is the Series 2003A Special Assessments. To the extent that landowners fail to pay such Assessments, delay payments, or are unable to pay Assessments, the successful pursuit of collection procedures available to the District is essential to continued payment of principal of and interest on the Series 2003A Bonds. The Act 14

19 provides for various methods of collection of delinquent taxes by reference to other provisions of the Florida Statutes. The following is a summary of assessment payment and collection procedures appearing in the Florida Statutes, but is qualified in its entirety by reference to such statutes. The District has covenanted in the Indenture to assess, levy, collect or cause to be collected and enforce the payment of Assessments pledged to the Series 2003A Bonds in the manner prescribed by the Indenture and all resolutions, ordinances or laws thereunto appertaining and pay or cause to be paid to the Trustee the proceeds of Assessments, as received. Florida law provides that, subject to certain conditions, non-ad valorem special assessments may be collected in the same manner as county ad valorem taxes or directly by the District. Series 2003A Special Assessments to be Collected Directly by the District Prior to Platting. It is contemplated that the District will collect the Series 2003A Special Assessments directly prior to the platting into lot-sized parcels. Such method of collection permits foreclosure in the same manner as real estate mortgages. Section , Florida Statutes, provides that upon the failure of any property owner to pay the principal of Series 2003A Special Assessments or the interest thereon, when due, the governing body of the District is authorized to commence legal proceedings for the enforcement of the payment thereof, including commencement of an action in chancery, commencement of a foreclosure proceeding in the same manner as the foreclosure of a real estate mortgage, or commencement of an action under Chapter 173, Florida Statutes, relating to foreclosure of municipal tax and special assessment liens. It is likely that any action to enforce payment of the Series 2003A Special Assessments will proceed under the provisions of Chapter 173, Florida Statutes, which provides that after the expiration of one year from the date any special assessment or installment thereof becomes due, the District may commence a foreclosure proceeding against the lands upon which the assessments are liens. Such a proceeding is in rem, meaning that it is brought against the land and not against the owner. After at least thirty (30) days' written notice to any record owner and at least four (4) weeks' prior published notice, a judicial hearing will be conducted in which any interested party may appear and contest the foreclosure; however, any person contesting the assessment or the lien must deposit with the court the amount which such party claims is the amount of any such assessment which is due. Upon a judgment for delinquent assessments, a special master will be appointed to sell the property at public auction, at which sale the District may also bid. Proceeds of any such foreclosure sale are required by the statute to be shared for the payment of state, city, county or other taxes or assessments in the manner determined by the special master. THERE CAN BE NO ASSURANCE THAT ANY SALE, PARTICULARLY A BULK SALE, OF LAND SUBJECT TO DELINQUENT ASSESSMENTS WILL PRODUCE PROCEEDS SUFFICIENT TO PAY THE FULL AMOUNT OF SUCH DELINQUENT ASSESSMENTS PLUS OTHER DELINQUENT TAXES AND ASSESSMENTS APPLICABLE THERETO. ANY SUCH DEFICIENCY COULD RESULT IN THE NECESSITY OF THE DISTRICT TO RELY UPON AMOUNTS IN THE RESERVE ACCOUNT IN THE DEBT SERVICE RESERVE FUND TO PAY DEBT SERVICE ON THE SERIES 2003A BONDS WHEN DUE. Series 2003A Special Assessments, After Platting, to be Collected in Same Manner as County and School District Taxes. Florida law provides that subject to certain conditions, assessments may be collected in the same manner as county and school district ad valorem taxes. 15

20 Subsequent to platting, the Series 2003A Special Assessments are expected to be collected utilizing the tax roll collection method. Assessments pledged to the Series 2003A Bonds will be payable in annual installments and will be levied by the District each year until the final stated maturity of the Series 2003A Bonds. The District will certify to the Osceola County Property Appraiser the amount of the Assessments which include principal and interest payable on the Series 2003A Bonds in the subsequent year. The District has an agreement with the Property Appraiser that the Property Appraiser will place such Assessments on the tax roll and forward the roll to the Osceola County Tax Collector's office which is empowered to collect such Assessments. The statutes relating to enforcement of county taxes provide that county taxes become payable on November 1 of the year when assessed, constitute a lien upon the land from January 1 of the year following their levy, are due March 1 of such following year and are delinquent on April 1 of such following year. The tax collector of Osceola County (the "County Tax Collector") is to bill such taxes together with all other County taxes, and landowners in the District are required to pay all such taxes without preference in payment of any particular increment of the tax bill, such as the increment owing for the Assessments. Upon receipt of monies from the County Tax Collector, either the Trustee or the District, as applicable, will cause such monies to be deposited to the corresponding Revenue Account in the Revenue Fund established under the Indenture for the Series 2003A Bonds. All county, school and special district taxes, assessments and voter-approved ad valorem taxes, including Assessments levied by the District, are payable at one time. If a taxpayer does not make complete payment, he or she cannot designate specific line items on his or her tax bill as deemed paid in full. In such cases, the Tax Collector does not accept such partial payments and the partial payment is returned to the taxpayer. Therefore, any failure to pay any one line item, whether it be the Assessments or not, would cause the Assessments to not be collected to that extent which would have a significant adverse effect on the ability of the District to make full or punctual payment of Debt Service on the Series 2003A Bonds. If Assessments are paid during the November of the year when assessed or during the following three months, the taxpayer is granted a variable discount equal to 4% in November and decreasing 1% per month to 1% in February. All unpaid taxes become delinquent on April 1 of the year following assessment, and the County Tax Collector is required to collect taxes prior to April 1 and after that date to institute statutory procedures upon delinquency to collect assessed taxes. Delay in the mailing of tax notices to taxpayers will result in a delay throughout this process. Taxpayers may elect to pay assessments in quarterly payments on June 30, September 30, December 31 of the year levied and March 31 of the year following. The first three payments receive discounts of 6%, 4% and 3% respectively. Certain qualified taxpayers may defer the assessments on homestead property. The amount of ad valorem taxes and non-ad valorem assessments which may deferred is limited to an amount by which such amounts exceed 5% of the taxpayer's household income for the prior calendar year provided that applicants with household income of less than $10,000 may defer the taxes and 16

21 assessments in their entirety. Any such deferred taxes and assessments bear interest at a variable rate not to exceed 9.5%. Collection of delinquent taxes is, in essence, based upon the sale by the County Tax Collector of "tax certificates" and remittance of the proceeds of such sale to the District for payment of the Assessments due. In the event of a delinquency in the payment of taxes, the landowner may prior to the sale of the tax certificates, pay delinquent taxes plus an interest charge of 18% per annum on the amount and on other costs and charges, except that there shall be a minimum interest charge of 3% on the amount of delinquent taxes. If the landowner does not act, the County Tax Collector is to sell tax certificates to the person who pays the taxes owing and interest thereon and certain costs, and who accepts the lowest interest rate to be borne by the certificates (but not more than 18%). If there are no bidders, the County is to hold, but not pay for, tax certificates with respect to the property, bearing interest at the maximum legal rate of interest. The County may sell such certificates to the public at any time at the principal amount thereof plus interest at the rate of not more than 18% per annum and a fee. The demand for such certificates is dependent upon various factors which include the rate of interest which can be earned by ownership of such certificates and the value of the land which is the subject of such certificates and which may be subject to sale at the demand of the certificate holder. The underlying market value of the property in the District should determine the demand for such property and the expectation of successful collection of the Assessments thereon which are the primary source of payments on the Series 2003A Bonds. Any tax certificate in the hands of a person other than the County may be redeemed and cancelled by the person owning or claiming an interest in the underlying land, or a creditor thereof, so long as such redemption occurs prior to the time a tax deed is issued. The person effecting such redemption must pay the face amount of the certificate and interest at the rate borne by the certificate plus costs and other charges. Regardless of the interest rate actually borne by the certificates, persons redeeming tax sales certificates must pay a premium interest rate of 5%, unless the rate borne by the certificates is zero percent. The proceeds of such redemption are paid to the County Tax Collector who transmits to the holder of the tax certificate such proceeds less service charges, and the certificate is cancelled. Redemption of tax certificates held by the County is effected by purchase of such certificates from the County, as described in the preceding paragraph. The private holder of a tax certificate which has not been redeemed has seven years from the date of issuance in which to act against the property. After an initial period of two years has passed, during which time action against the land is held in abeyance to allow for sales and redemptions of tax certificates, such holders may apply for a tax deed. The applicant is required to pay to the County Tax Collector all amounts required to redeem outstanding tax certificates covering the land not held by him, and any omitted taxes or delinquent taxes, plus interest. If the County holds a tax certificate and has not succeeded in selling it, the County must apply for a tax deed after the County's ownership of such certificate for two years. The County pays costs and fees to the County Tax Collector but not any amount to redeem other outstanding certificates covering the land. Thereafter, the property is advertised for public sale. 17

22 In any such public sale, the private holder of the tax certificate who is seeking a tax deed for non-homestead property is deemed to submit a minimum bid equal to the amount required to redeem the tax certificate, and charges for cost of sale, redemption of other tax certificates on the land, and the amounts paid by such holder in applying for the tax deed, plus interest thereon. In the case of homestead property, the minimum bid must include, in addition to the amount of money required for the opening bid on non-homestead property, an amount equal to one-half of the latest assessed value of the homestead. If there are no other bidders, the holder receives title to the land, and the amounts paid for the certificate and in applying for a tax deed are credited toward the purchase price. If there are other bidders, the holder may enter the bidding. The highest bidder is awarded title to the land. If there are no bidders, the County may purchase the land within ninety (90) days of the offering for public sale for the minimum bid. After ninety (90) days have passed, any person may purchase the land by paying the minimum bid to the County. Taxes accruing after the date of public sale do not require the repetition of this process but are added to the minimum bid. Seven (7) years after the date of public sale, unsold lands escheat to the County in which they are located and all tax certificates and liens against the property shall be canceled and a deed is executed vesting title in the County Commissioners. The portion of proceeds of such sale needed to redeem the tax certificate (and all other amounts paid by such person in applying for a tax deed) are forwarded to the holder thereof or are credited to such holder if he is the successful bidder. Excess proceeds are distributed first to satisfy governmental liens against the property and then to the former title holder of the property (less service charges). Prepayment of Assessments Pursuant to the terms of the Act and the assessment proceedings relating to the Series 2003A Bonds, the owner of property subject to Assessments may pay the entire balance of such Assessment remaining due within thirty (30) days after the corresponding Project has been completed and the Board of Supervisors has adopted a resolution accepting such Project as provided by Florida Statutes, Section , without interest, and, may prepay the Assessments in whole at any time, and in part one time, if there is also paid, in addition to the prepayment amount, an amount equal to the interest that would otherwise be due on such balance on the next succeeding Interest Payment Date for the Series 2003A Bonds, or, if prepaid during the forty-five day period preceding such Interest Payment Date, to the next succeeding Interest Payment Date. The Landowner, in a covenant running with the land, has waived the benefit of the statutory option to prepay under Section without interest as described above on behalf of itself and future owners of the land. The Series 2003A Bonds are subject to extraordinary mandatory redemption as indicated under "Description of the Series 2003A Bonds - Redemption Provisions - Extraordinary Mandatory Redemption of Series 2003A Bonds," from such Prepayments at the redemption price of par plus accrued interest to the date of such redemption. The prepayment of installments of Assessments does not entitle the owner of the property to a discount for early payment. Adjustments to Assessments Upon completion of the 2003A Project, the Series 2003A Special Assessments will be credited with any excess of the original Series 2003A Special Assessments over the actual cost 18

23 (including, without limitation, costs associated with the issuance of the Series 2003A Bonds (and any Parity Bonds), the capitalized interest and the Reserve Account within the Debt Service Reserve Fund) funded from proceeds of the Series 2003A Bonds. Assessment Methodology A Supplemental Special Assessment Allocation Report relating to the Series 2003A Bonds prepared by Rizzetta & Company, Incorporated, the Financial Consultant to the District appears herein in Appendix E. The comprehensive assessment methodology is supplemented for the Assessments relating to each Series of Bonds using construction cost estimates and land use areas provided by the Consulting Engineer and a bond par amount and debt service schedule provided by the Underwriter. The Financial Consultant makes no representation or warranty as to the accuracy of the information provided by other parties for inclusion in the Assessment Methodology. The District has heretofore adopted the general allocation methodology described below, and, has apportioned the benefits of the Series 2003A Project upon the issuance of the Series 2003A Bonds therefor in accordance with the general apportionment methodology described below. Structure of Assessments. Assessments will be payable over no more than 30 annual installments. According to the District's Assessment Proceedings, the owner of the property subject to the Assessments may pay the entire balance either: (i) in full at any time or (ii) partially, one time (upon reclassification of a parcel as described below). Apportionment Methodology. The Assessments are first apportioned to each Village on the basis of intended costs and benefits. Initially, all of the land within the District was classified as "Undesignated." Classification of the land is changed to one of the other, permanent, classifications, upon written request to the District by the landowner. Reclassification results in the imposition of the "Density Reduction Payment," if applicable (described below), and terminates the right of the landowner to prepay the Assessment in part. The allocation of the Assessments to property classified as "Undesignated" is determined by dividing (x) the aggregate amount of the Assessments of such Series apportioned to each Village which have not been allocated to property previously classified by (y) the number of acres of land in such Village which have not been reclassified (i.e. the "Undesignated Land"). The result of such allocation is to spread evenly the unallocated Assessments of each Series in each Village over all of the Undesignated Acres in each Village. The benefit theory underlying such method of allocation is that the assessable improvements yield development rights which constitute a special benefit to the property to which they appertain. As development rights are allocated first to all of the land in the area to which the development order applies and then expended as such rights are used, so are the Assessments of each Series allocated first to all of the developable land and then allocated in relation to the expenditure of the development rights. Upon reclassification of a parcel in a Village to the end-use, the per acre Assessment of each Series in such Village attributable to "Undesignated" property is redetermined. The basis for the reallocation is to apportion the costs allocable to roads, if any, based upon average daily trip generation rates and to apportion non-road related costs based upon equivalent residential units. In 19

24 order to prevent any Assessment of a Series relating to Undesignated Land from increasing (which would reflect that the average density of development per acre was less than originally anticipated), the Assessment Methodology requires that there be paid a "Density Reduction Payment" to recover the cost of benefits of infrastructure constructed for a higher level of use but which cost could not otherwise be recovered due to the lowered development density. The Density Reduction Payment is described in the Assessment Methodology under the caption "MODIFICATIONS AND REVISIONS." The allocations of permanent Assessments are set forth in the Assessment Methodology by product type. Annual installments of Assessments will be grossed-up by dividing the annual installment for principal and interest by up to.94 (1-Maximum Discount-Maximum Costs of Collection) in order to insure that sufficient monies are netted to the District after allowable discount and administrative expenses to pay Debt Service on the Series 2003A Bonds. In addition, the District will impose, levy and collect an annual operation and maintenance assessment to fund ongoing operations of the District. The owners of land within the District have an option to prepay Assessments at any time; however, it is not anticipated that the Landowner will prepay the Series 2003A Special Assessments. No assurance can be given that any particular level of prepayment will or will not occur in the future or as to the timing of such Prepayments by future landowners. Reserve Account in the Debt Service Reserve Fund The Indenture establishes a separate account in the Debt Service Reserve Fund for the Series 2003A Bonds. The Reserve Account for the Series 2003A Bonds will be cash funded from the proceeds of the Series 2003A Bonds at closing in an amount equal to the Debt Service Reserve Fund Requirement applicable to the Series 2003A Bonds. Amounts on deposit in the Reserve Account for the Series 2003A Bonds may be used only for the purpose of paying interest or principal on the Series 2003A Bonds whenever amounts on deposit in the accounts established for the Series 2003A Bonds in the Debt Service Fund is insufficient for such purpose. (See "Security for and Source of Payment of the Series 2003A Bonds - Reserve Account in the Debt Service Reserve Fund. ) General The 2003A Project The Series 2003A Bonds will provide a portion of the necessary funding for public infrastructure for South Village 2. Utility improvements for South Village 2 will be funded by Utility Revenue Bonds, Series 1999, issued by the Enterprise District. According to the Engineer's 20

25 Report, South Village 2 may be completed, with all the necessary public infrastructure to support the development program, without reliance on subsequent phases. The South Village 2 improvements will be divided into several components: roadway, potable water, wastewater collection and transmission, reuse water, parcel earthwork for the collection and control of stormwater runoff, stormwater management, streetlight and alley lighting, sidewalks and trails and landscaping/hardscaping of public area improvements for South Village 2. The South Village 2 financing program will be comprised of the Series 2003A Bonds and other funding as follows: Non-Utility Infrastructure $11,137,089 * Utility Infrastructure 1,913,385 ** Additional Infrastructure 248,600 *** Total $13,299,074 * These amounts will be funded from both the Series 2003A Bonds as well as developer advances/future assessment bond series. ** The $1,913,385 is a portion of Enterprise District Utility Bonds, Series 1999 in an aggregate amount of $13,338,483. *** Developer Contribution. The improvement costs for South Village 2 to be funded, in part, from the proceeds of the Series 2003A Bonds, are set forth below: Roads and Bridges $ 2,672,325 Earthwork 2,176,715 Stormwater Management Systems 1,118,879 Common Area Development/Parks/Trails 2,686,257 Streetlights 457,992 Subtotal 9,112,168 Professional Services/Contingency 2,024,921 Total $11,137,089 The estimated construction costs for the South Village 2 improvements were prepared by the District Engineer based upon master plans and preliminary engineering designs and utilized comparable unit prices from previous Phases' actual bidding results and from comparable information on similar projects within Central Florida. The necessary permits for Phase 1, Phase 2 and Phase 3 have been acquired. The necessary permits for Phase 4 have been acquired, with the exception of portions of East Village and Aquila Reserve (formerly designated East Village 2), which are still being prepared or in process. Identification of the various Phase V/South Village 2 permits and their status has been included in the Engineer's Report. Design and permitting the primary roadways of Phase 4 improvements have been completed. Design and permitting of East 21

26 Village has been completed. Design and permitting of Roseville Corner is complete. Design and permitting of Aquila Reserve is currently underway. Construction of the South Village 2 infrastructure began in the Fall of 2002 and will continue through September The District does not own or operate a water and wastewater treatment plant. Instead, potable water and sanitary sewer service is provided to Celebration by the Enterprise District under and pursuant to the terms of an interlocal agreement. Water, wastewater and reuse water is supplied to the Enterprise District by the City of Kissimmee, Florida (the "City"), under and pursuant to the terms of a Large User Service Agreement, between the Enterprise District, as assignee of The Celebration Company, and the City. Funds for the Phase 4 and 5 utility services will be provided from the proceeds of the Enterprise District's Utility Revenue Bonds, Series Permits and Approvals According to the Engineer's Report all permits for Celebration Place Widening, Celebration Boulevard Widening, Celebration Boulevard Extension and Roseville Corner have been received. East Village and Aquila Reserve permits have been submitted and are under review by the respective regulatory agencies. As set forth in the Engineer's Report, there are no anticipated delays in permitting the District infrastructure improvements. A summary of the District wide and Phase 5 permits are summarized in Table 4-6 of the Engineer's Report included herein as Appendix A. Repayment of Certain Obligations to the Developer In connection with the acquisition and construction of the 2003A Project, the Developer has advanced funds to the District to pay for components of the 2003A Project. Such advances will be repaid from the proceeds of the Series 2003A Bonds in the approximate amount of $700,000. The Series 2003A Bonds will fund only a portion of the cost of the 2003A Project. The remaining costs will be funded by moneys advanced by the Developer pursuant to a funding agreement which provides that the Developer advances will be repaid from proceeds of future Series of Bonds, when, as and if issued. No assurance can be given that the District will issue such future Series of Bonds. Completion of the portion of the 2003A Project is dependent upon the Developer satisfying its obligations under the funding agreement. 22

27 Estimated Sources and Uses of Funds Sources (1) Series 2003A Bond Proceeds $6,035, Total Sources $6,035, Uses(1) Deposit to Series 2003A Construction Fund $4,706, Capitalized Interest(2) 624, Costs of Issuance and Underwriter's Discount 294, Deposit to Reserve Account 454, Total Uses $6,035, (1) Does not include accrued interest from February 15, (2) Represents interest on the Series 2003A Bonds through November 1,

28 Principal and Interest Requirements Series 2003A Bonds May 1 of the Year Principal Interest Total 2003 $81, $81, , , $70, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , $6,035, $8,193, $14,228,

29 The District General Information The District was established by Rule 42Q promulgated by the Florida Land and Water Adjudicatory Commission on March 8, 1994 and effective on March 29, Powers Among other provisions, the Act gives the District's Board of Supervisors the authority to (a) plan, establish, acquire, construct or reconstruct, enlarge or extend, equip, operate and maintain: (i) water management and control for lands within the District and to connect any of such facilities with roads and bridges, (ii) water supply, sewer and wastewater management systems or any combination thereof and to construct and operate connecting intercept or outlet sewers and sewer mains and pipes and water mains, conduits, or pipelines in, along, and under any street, alley, highway, or other public place or ways, and to dispose of any effluent, residue, or other byproducts of such system or sewer system, (iii) bridges or culverts, (iv) roads equal to or exceeding the specifications of the county in which such district roads are located, and street lights, (v) any other project within or without the boundaries of a district when a local government issued a development order approving or expressly requiring the construction or funding of the project by the District, or when the project is the subject of an interlocal agreement between the District and a governmental entity and is consistent with the local government comprehensive plan of the local government within which the project is to be located; (b) borrow money and issue bonds of the District; (c) impose and foreclose special assessment liens as provided in the Act; and (d) exercise all other powers necessary, convenient, incidental or proper in connection with any of the powers or duties of the District stated in the Act. In addition, pursuant to the Act, the District has been authorized by Resolution of Osceola County, Florida, the local general-purpose government within the jurisdiction of which such powers are to be exercised, to exercise additional powers under the Act, including planning, establishing, acquiring, constructing or reconstructing, enlarging and extending, equipping, operating, and maintaining additional systems and facilities for parks and facilities for security, solid waste disposal, indoor and outdoor recreational, cultural, and educational uses. The Act does not empower the District to adopt and enforce land use plans or zoning ordinances and the Act does not empower the District to grant building permits, which functions are performed by the County acting through its Board of County Commissioners and its departments of government. Board of Supervisors The governing body of the District is its Board of Supervisors (the "Board"), which is composed of five Supervisors (the "Supervisors"). The Act provides that at the initial meeting of the landowners Supervisors must be elected with the two Supervisors receiving the highest number of votes to serve for four years and the remaining Supervisors for a two-year term. Three of the five Supervisors are elected to the Board every two years in November. At such election the two Supervisors receiving the highest number of votes are elected to four-year terms and the remaining 25

30 Supervisor is elected to a two-year term. Four Supervisors normally serve a four-year term while the fifth Supervisor normally serves a two-year term. Commencing with the election of Supervisors in 2004, the Supervisors will begin to be elected by the electors of the District in the manner prescribed by Florida law for holding general elections. If there is a vacancy on the Board, the remaining board members are to fill each vacancy for the unexpired term. below: The current members of the Board, the occupation and the term of each member are set forth Current Term Term Name Title Commenced Expires HalMcIntyre* Chairman November, 2000 November, 2004 Linda Goodwin-Nichols Vice Chair November, 2000 November, 2004 Steven D. Katz** Secretary November, 2002 November, 2006 David Muenks* Member*** November, 2002 November, 2006 Eva Tukdarian* Member*** November, 2002 November, 2004 * Employee of The Walt Disney Company or its subsidiaries. ** Resident member. *** Also an Assistant Secretary. The Act authorizes the Board to hire such employees and agents as it may determine necessary. Hopping Green & Sams, Professional Association., Tallahassee, Florida, serves as counsel to the District. The District has retained Greenberg Traurig, P.A., Miami, Florida, as Bond Counsel. The District has retained Severn Trent Services, Inc. as District Manager. Rizzetta & Company, Incorporated has been retained as financial consultant to the District. Pursuant to the Act, the District has retained PBSJ, Orlando, Florida, as District Engineer. The District Manager The chief administrative official of the District is the District Manager. The Act provides that the District Manager has charge and supervision of the works of the District and is responsible for preserving and maintaining any improvement or facility constructed or erected pursuant to the provisions of the Act, for maintaining and operating the equipment owned by the District, and for performing such other duties as may be prescribed by the Board. The District has retained Severn Trent Services, Inc., Celebration, Florida (the "District Manager") to serve as District Manager. The District Manager is actively involved in the management of more than 100 special districts throughout the State of Florida, including community development districts, that have collectively issued in excess of $1,000,000,000 of bonds in more than 70 separate financings. The District Manager's office is located at 610 Sycamore Street, Suite 140, Celebration, Florida and its telephone number is (407)

31 Outstanding Bonds The District has previously issued its $63,455,000 Celebration Community Development District Special Assessment Bonds, Series 1994 (the "1994 Bonds") under and pursuant to the First Supplemental Indenture, dated as of June 15, 1994 (the "First Supplemental Indenture"), from the District to the Trustee, $14,165,000 of which are Outstanding. The District has previously issued its $9,890,000 Celebration Community Development District Special Assessment Bonds, Series 1997A (the "Series 1997A Bonds") under and pursuant to the Second Supplemental Trust Indenture, dated as of June 1, 1997 (the "Second Supplemental Indenture"), from the District to the Trustee, of which $4,125,000 remains Outstanding and its $9,475,000 Celebration Community Development District Special Assessment Bonds, Series 1997B (the "Series 1997B Bonds") under and pursuant to the Third Supplemental Trust Indenture, dated as of June 1, 1997 (the "Third Supplemental Indenture"), from the District to the Trustee, of which $3,340,000 remains Outstanding (the Series 1997A Bonds and the Series 1997B Bonds are hereinafter referred to collectively as the Series 1997 Bonds ). The District has also previously issued its $19,760,000 Celebration Community Development District Special Assessment Bonds, Series 1999 (the "Series 1999 Bonds") under and pursuant to the Fourth Supplemental Trust Indenture, dated as of May 1, 1999 (the "Fourth Supplemental Indenture"), from the District to the Trustee, of which $6,325,000 remains Outstanding. The District has also previously issued its $18,285,000 Celebration Community Development District Special Assessment Bonds, Series 2002A (the "Series 2002A Bonds") under and pursuant to the Fifth Supplemental Trust Indenture, dated as of April 1, 2002 (the "Fifth Supplemental Indenture"), from the District to the Trustee and $2,760,000 Celebration Community Development District Special Assessment Refunding Bonds, Series 2002B Bonds (the "Series 2002B Bonds") under and pursuant to the Sixth Supplemental Trust Indenture, dated as of April 1, 2002 (the "Sixth Supplemental Indenture"), each Series of which is Outstanding in the original aggregate principal amount. The 2003A Bonds are secured by a separate pledge under the Indenture and such Series does not constitute parity Bonds with any other Series and no Assessments levied with respect to the foregoing Bonds are levied on property subject to the Series 2003A Special Assessments. 27

32 The Arvida Development Within Celebration The information appearing under the captions "The Arvida Development Within Celebration" and "The Landowner and the Developer" has been furnished by St. Joe Residential Acquisitions, Inc., a Florida corporation (the "Landowner") and St. Joe/Arvida Company, L.P. ("Arvida" or the "Developer") for inclusion in this Limited Offering Memorandum and, although believed to be reliable, such information has not been independently verified by the District or its counsel, or the Underwriter or its counsel, and no person other than the Landowner or the Developer makes any representation or warranty as to the accuracy or completeness of such information supplied by them. Overview Celebration Lands within Phase V/South Village 2 are located within the development project known as Celebration. Celebration is approximately 8,075 acres of a planned, mixed-use development located in the northwest corner of Osceola County. The approximate developable area is 3,954 acres. Development is nearly complete on the east side of Interstate 4 and is made up of several villages. Village developments include single family and multi-family residential units, commercial, office, retail, a health facility, civic facilities, a Town Center area, an eighteen-hole golf course, and the amenities associated with a large, mixed-use development. Celebration is currently in its ninth year of development. The Celebration community is served by Celebration Place, a 125-acre master-planned commercial center and Town Center, which is the social, civic, and commercial heart of Celebration. Education in Celebration consists of public schools, including a combined elementary and secondary school and a high school is expected to be opened in August, 2003, funded, constructed and operated by the School Board of Osceola County, Florida, with financial enhancements previously provided by The Celebration Company. Recreational amenities include an 18-hole golf course designed by Robert Trent Jones, Sr. and Robert Trent Jones, Jr., which opened in October 1996, a community park adjacent to the lake at Town Center, walking and bike paths and nature trails, four community swimming pools, tennis courts and park facilities. In addition, Stetson University has a satellite campus in Celebration. The residential areas of Celebration feature a complementary blend of style and form, reminiscent of traditional neighborhoods found in notable towns throughout the United States. Custom and production homes, townhouses, and apartments are offered at a variety of prices, are laid out in accordance with Celebration s master plan, and are intended to create a living environment that is both aesthetically pleasing and encourages neighborhood interaction. Internationally recognized architects and planners have developed pattern books for the residences for Celebration, which reflect architectural styles indigenous to the southern and southeastern United States constructed prior to

33 On December 2, 2002, the Celebration Company announced the sale of approximately 400 acres in Celebration to Four Seasons Hotels and Resorts. The site is contemplated as a multi-use resort including a 425-room luxury hotel, an 18-hole championship golf course, an exclusive enclave on single-family homes and a fractional ownership Four Seasons Residence Club. A date for commencement of construction has not yet been determined. Governance Celebration is comprised of two community development districts ( CDDs ), the Celebration CDD and the Enterprise CDD, which were established by rule of the Florida Land and Water Adjudicatory Commission effective March 29, 1994, pursuant to the provisions of Chapter 190, Florida Statutes. These CDDs were established to provide infrastructure for Celebration. In addition, Celebration has two community associations, one for residential and one for commercial properties, which establish rules and enforce covenants on their respective property owners. Background The real estate on which Celebration is located was originally acquired by a subsidiary of The Walt Disney Company in the early 1960's. Master planning of the community began in the mid 1980's, and the permitting and public approval process commenced in the early 1990's. Most of the property owned by subsidiaries of The Walt Disney Company in central Florida, including Celebration, has been located within the Reedy Creek Improvement District, an independent special district under Florida law ("RCID"). Therefore, RCID, rather than Osceola County, regulated land use within its boundaries. On March 18, 1994, the property contemplated to include Celebration was deannexed from RCID. Celebration is now subject to land use regulation by Osceola County. In anticipation of such deannexation, a development order was issued by Osceola County and approved by the Florida Department of Community Affairs, permitting the development within Celebration, which order became effective simultaneously on such deannexation (the "Development Order"). Previous Phases of Development within Celebration Construction of the first phase of development within Celebration commenced in Celebration s first residents purchased homes in the Summer of 1996, with Town Center opening later that year. As of December 2002, public infrastructure had been installed in Celebration Village, Celebration West Village, Lake Evalyn, North Village, South Village, Roseville Corner and East Village as part of Phases 1 though 4. Completed development within the prior phases is described in "Appendix A - Engineer's Report." 29

34 The Arvida Development Phase V / South Village 2 The Developer, as the project developer for The St. Joe Company, is developing Phase V / South Village 2 (the Development ), a 175 acre residential community. The Development is the fifth phase of Celebration and is planned to consist of 616 residential units, including 314 singlefamily and 302 multi-family homes. In addition, the Developer anticipates the Development will include a clubhouse, fitness center, spa, swimming pool, open space amphitheater, parks, and trails. The Development will be accessed from Celebration Avenue, a main thoroughfare within Celebration. Land Acquisition Arvida acquired the land within the Development for cash from The Celebration Company in September, 2002 at a purchase price of $4,500, As part of the sale, all of the special assessments related to the 1994 Bonds and the 1997B Bonds were prepaid and there will be no other special assessments of the District on the lands within the Development other the 2003A Special Assessments. Residential Community The Development will include a variety of product types including attached and detached single family homes and for sale condos. With the exception of the Village series homes, all of the single-family homes will be neo-traditional with rear load garage homes. The Village series homes back up to preservation land and as such will have front load garages. The condo units will be constructed in 8 different buildings ranging from 2 5 floors. The anticipated product mix and average home/lot prices are summarized below: Product Type No. Units Lot Size Square Feet Base Home/Lot Price Single Family Townhomes x $208,000 $312,000 Village x $338,000+ Cottage x $234,000 $364,000 Bungalow x $208,000 $312,000 Subtotal 314 Multi-Family Condo s 302 N/A 1600 $200,000 Subtotal 302 Total 616 The lots in Phase V/South Village 2 are slightly larger (10 15%) than those in previous phases of Celebration. The larger lot sizes allows for the construction of a 2-story home with the 30

35 master bedroom downstairs or a ranch style home, which appeals to the target market as defined below. Arvida will act as both developer and primary homebuilder for all but the Village Series homes. Arvida anticipates selling finished lots exclusively to an independent builder, Issa Homes to build the Village Series homes. Issa Homes is currently building in Celebration and has worked with Arvida or its predecessors for over (20) years in South and Central Florida, specifically within the following development projects known as Boca West, Weston, Broken Sound and Victoria Park. Arvida is currently in contract negotiations with Issa Homes, and anticipates contract execution during first quarter Through market research, Arvida believes the target market for Phase V/South Village 2 is primarily active baby boomers; however, the Development will not be age-restricted. Based on Celebration s prior sales history Arvida believes approximately 80% of the Development will be primary homes with the remaining 20% representing second home or investment properties. Home pre-sales are expected to commence in fourth quarter 2003, with reservations occurring as early as the third quarter Model homes will open during the fourth quarter The first home closing is anticipated to occur during the first quarter of Arvida projects that residential homes will be sold (i.e. contract secured with deposit and having only a financing contingency) over a 4.25-year period as set forth in the following table: Total Village Cottage Bungalow Townhomes Condo s Total The projected absorption rates are based upon estimates and assumptions made by Arvida that are based in part on market studies. While Arvida considers such estimates and assumptions reasonable, they are inherently uncertain and subject to significant business, economic and competitive uncertainties and contingencies, all off which are difficult to predict and many of which are beyond the control of Arvida. As a result, there can be no assurance that such absorption rates will occur or be realized in the manner set forth in the table. In addition to the foregoing residential development, the Developer anticipates that it will fund from sources other than the proceeds of special assessment bonds the following amenities package for Phase V/South Village 2 of Celebration: 12,000 square foot clubhouse complete with multi-purpose rooms for games, cards, and billiards; pool; fitness center; spa; and summer kitchen (open air cabana). The Development will include 14 parks, including an amphitheater with seating abutting a natural preserve. In addition, the Development will have approximately 1.2 miles of 31

36 trails, which will connect to the trail system traversing Celebration. The Developer expects the club to open during the first quarter of As part of the recreational facilities, the club will feature a full-time Art of Living Director whose job is to operate programs geared towards the active adult. Part of the director s responsibility will be to coordinate events for the Phase V/South Village 2 residents, act as a community concierge, and create interaction among the residents. Arvida has used this feature at some of its other developments, including Southwood and Victoria Park. The director will be funded out of the Phase V/South Village 2 homeowners association budget. Assessments It is anticipated that the annual installments of Series 2003A Special Assessments and the principal amount of the permanent portion of Assessments on platted parcels comprising Phase V/South Village 2, as more particularly described under the subcaption Security for and Source of Payment of the Series 2003A Bonds Assessment Methodology, will be as follows: Permanent Projected Series 2003A Total Assessment Par 2003A Bonds/Unit Annual Assessment 2003A Project/Unit (1) Village $20,255 $1,650 $67,717 Cottage 13,503 1,100 37,251 Bungalow 12, ,656 Townhomes 9, ,678 Condo s 5, ,944 (1) Includes the principal of Assessments which would secure Bonds which may be issued in the future by the District. The Assessments related to such future Bonds, when, as and if issued, are expected to be prepaid prior to sale of a lot or unit to an end user. Homeowners Association As noted above, a master homeowners association, the Celebration Residential Owners Association (CROA), enforces covenants in Celebration. Residents of the Development will be a part of CROA and will have the same community rights and privileges as other Celebration residents. In addition, a separate service area will be created for Phase V/South Village 2 specific amenities. These amenities will be managed by a Phase V/South Village 2 homeowners association. The condominium units will share the common areas, but will also have its own condominium association. 32

37 Marketing Homes within the Development will be sold from an on-site sales center. Until the clubhouse is completed, sales will be marketed in the model homes. The Developer anticipates constructing 10 model homes, which are scheduled to open fourth quarter The marketing program includes signage both on-site and in the vicinity of the Development, advertisements in real estate periodicals, television commercials, as well as the daily newspapers. The Developer will fund marketing costs. Competition The Developer believes the Development s residential product is unique relative to competing real estate development projects. In general, the Developer believes that the Development will enjoy a competitive advantage, because the community is being designed with the active adult market in mind, in terms of its residential design and recreational amenities, and as such, is the only such product within Celebration. The Landowner and the Developer The Landowner is one of four operating segments of The St. Joe Company ("St. Joe"). St. Joe is a Florida corporation that is listed on the New York Stock Exchange as "JOE" and is one of Florida's leading real estate operating companies. St. Joe is a diversified company, which conducts primarily all of its business in four reportable operating segments, which are community residential development, commercial real estate development and services, forestry and land sales. St. Joe is one of the single largest private landowners in the State of Florida (the "State"). It owns approximately 940,000 acres, which is approximately 3% of the land area of the State. Most of the land is timberland, but some is developed property or land suitable for future development. St. Joe is led by Chairman/CEO Peter Rummell and President, CFO and COO Kevin Twomey. In the community/residential development section, St. Joe's strategy is to develop large-scale, mixed-use communities primarily on company-owned land. Development of master-planned communities is a long-term endeavor, with build-out typically occurring over a five-to-fifteen-year period. St. Joe also intends to develop smaller scale residential projects that offer productive use of existing Company and acquired land. On November 12, 1997, St. Joe purchased a 74% general partnership interest in St. Joe/Arvida Company, L.P., ("Arvida") through a joint venture with JMB Southeast Development, L.L.C. and JMB Southeast Development L.P. The principal assets acquired by St. Joe and the other partners in Arvida were the "Arvida" name, proprietary information systems and the Arvida management team. St. Joe directs most of its community and residential development efforts through Arvida. The Limited Partnership Agreement of the Developer among St. Joe/Arvida Company, Inc. (the "Managing Partner") and JMB Southeast Development, L. L. C. (the "Non-Managing Partner") 33

38 and St. Joe Development, Inc. ("St. Joe Development") and JMB Southeast Development, L. P. ("JMB L. P.") gives certain rights to Non-Managing Partner and its affiliates with respect to participating as a minority owner (up to 26%) in the Development. The relevant portion of the agreement provides that the Managing Partner and St. Joe Development shall give notice ("Development Notice") to the Non-Managing Partner and provide them with certain information for them to make an investment decision. In connection with the Development, such Development Notice has been given and, to date, the option to participate has neither been accepted nor rejected. St. Joe is currently in negotiations to sell a 26% interest in the Development with an affiliate of JMB L. P. In such event, the entire Development would be transferred into a single-purpose entity owned by affiliates of St. Joe and JMB, L. P. and the new entity would become the Landowner. Arvida, in any event, would remain the Developer pursuant to a management agreement with the new Landowner. Projects which have been or are currently being developed by Arvida for St. Joe include the following: Northwest Florida WaterColor Construction continues at WaterColor, a 499-acre southern coastal resort and residential community on the beaches of the Gulf of Mexico in Walton County, Florida. At full build-out, the community, master planned by Jaquelin Robertson, will include approximately 1,100 residences, 100,000 square feet of commercial space, a beach club, tennis club, boathouse and lakefront park. The beach club and the upscale, 60-room WaterColor Inn are now open. Boating facilities on Western Lake are complete and in use. A casual lakeside restaurant, with family dining and an authentic coastal menu, as well as WaterColor s local gourmet market were also opened during Sales at WaterColor are expected to be completed by 2007 to WaterSound Approximately three miles east of WaterColor on about a mile of beachfront property, WaterSound Beach is being planned as an exclusive and secluded beachfront community also located in Walton County, Florida. Sales of home sites began at WaterSound Beach in the third quarter of This community is planned to include 499 units. Sales continue on the beachfront multifamily units designed by Graham Gund. In October of 2002, the Walton County Board of County Commissioners approved transmittal of a Comprehensive Plan Amendment for future phases of WaterSound, known as WaterSound North, to the Florida Department of Community Affairs for state review. Located north of U.S. Highway 98 and south of the Intracoastal Waterway, the preliminary design for WaterSound North calls for approximately 1,250 residential units and a golf course on 1,440 acres. The project 34

39 will require a Development of Regional Impacts ("DRI") process that is expected to get underway in early 2003 and continue for 12 to 18 months. The first 18-hole golf course at Camp Creek designed by Tom Fazio and near WaterSound opened in the Spring of Fairway cottages and an additional 18 holes of golf are planned. WindMark Beach Arvida, in its first step into residential development in Gulf County, Florida, launched its first community there in WindMark Beach is an 80-acre community under development that will offer 110 home sites, many of which will be beachfront. WindMark Beach will also offer a pool club, several community docks and a conservation area accessed by boardwalks and trails. Predevelopment planning has started for future phases of WindMark Beach on approximately 1,900 acres of former timberland along 3.5 miles of beachfront owned by St. Joe. These future phases, planned for 1,500 units, require a DRI process that is expected to get underway in early 2003 and continue for 12 to 18 months. SummerCamp Planning and entitlements are underway to develop 499 units at SummerCamp, a new beachfront vacation community located in Franklin County, Florida. Located on approximately 650 acres of former timberland, 45 miles south of Tallahassee, SummerCamp is a family destination on the Gulf of Mexico. During the second quarter of 2002, the Franklin County Commission approved transmittal of a Comprehensive Plan Amendment for SummerCamp to the Florida Department of Community Affairs for state review. Final action has been delayed by the Franklin County Commission, pending the resolution of state recommendations and comments. SouthWood SouthWood is located in southeast Tallahassee, Florida. Plans for SouthWood include approximately 4,250 homes and a variety of retail shops, restaurants, community facilities, and offices. Sales of homes and home sites commenced in the second quarter of Sales in SouthWood are expected to continue for up to 18 years. 35

40 Central Florida Victoria Park Sales commenced at Victoria Park, near Orlando, Florida in This 1,859 acre community is planned for approximately 4,000 residences built among parks, lakes and conservation areas, walking and bike paths, as well as an 18-hole golf course. The Victoria Hills Golf Club opened in December 2001 to excellent reviews. Approximately 40% of the land will be retained for open-space, recreation and conservation, allowing residents to enjoy vistas of natural wildlife and habitat areas. As additional club/amenity facilities are completed management expects sales activity to continue to increase. Sales at Victoria Park are expected to continue for more than 10 years. Northeast Florida St. Johns Golf and Country Club During 2001, sales commenced at St. Johns Golf and Country Club in St. Johns County, Florida. This community is planned to include 799 units and an 18-hole golf course which opened for play in The community swimming pool and fitness center opened in May of Sales are expected to continue for five to six years. James Island James Island is located in Jacksonville, Florida on 194 acres of land acquired by St. Joe and its affiliates. At full build-out, the community is expected to include approximately 365 housing units. Sales at James Island are expected to be concluded in RiverTown Predevelopment planning is underway at RiverTown, located along the St. Johns River in St. Johns County, Florida, just south of Jacksonville. RiverTown, situated on approximately 4,300 acres, requires a DRI process, which began in October of 2002, and is expected to continue for up to 24 months. North Carolina and South Carolina Affiliates of St. Joe and Arvida are currently developing 25 communities located in North Carolina and South Carolina. 36

41 Other Arvida Projects In addition to the projects described above, through a management agreement with Arvida/JMB Partners, L.P. (the "Partnership"), Arvida provided development and management, supervisory and advisory services as well as personnel to the Partnership for its residential communities in Florida including: Weston in Broward County, Grand Bay on Longboat Key, Sawgrass Country Club and the Players Club at Sawgrass near Jacksonville, and River Hills Country Club in Tampa. The Partnership also formed two 50/50 joint ventures with an unrelated third party to develop a residential community in Palm Beach County, Florida and one near Tampa, Florida. As referenced above, St. Joe is a publicly-traded company listed on the New York Stock Exchange. Copies of its most recent Form 10-K and Form 10-K filings are available upon request from the General Counsel of St. Joe at (904) , or in the archives of the website ( for the Securities and Exchange Commission (the "SEC"). St. Joe is subject to the information requirements of the Securities and Exchange Commission Act of 1934, as amended, and in accordance therewith files reports, proxy statements, and other information with the SEC. The file number of St. Joe with the SEC is Such reports, proxy statements, and other information can be inspected and copied at the Public Reference Section of the SEC, Room 1024, 450 Fifth Street NW, Judiciary Plaza, Washington, DC, and at the SEC's regional offices in Chicago (Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois). Copies of such materials can be obtained by mail from the Public Reference Section of the SEC at prescribed rates. The most recent Annual Report on Form 10-K of St. Joe on file with the SEC and any other documents and reports filed with the SEC by St. Joe subsequent to the date of such Annual Report (including Forms 10-Q and Forms 10-K) through and including the end of the "underwriting period" (as defined in SEC Rule 15c2-12) are hereby incorporated herein by reference. All documents subsequently filed by St. Joe pursuant to the requirements of the Exchange Act after the date of this Limited Offering Memorandum will be available for inspection in the same manner as described above. Bondholders' Risks There are certain risks inherent in an investment in bonds secured by special non-ad valorem assessments issued by a public authority or governmental body in the State of Florida. Certain of these risks are described in the preceding section entitled "Security for and Source of Payment of the Series 2003A Bonds - Enforcement and Collection of Assessments." Certain additional risks are associated with the Series 2003A Bonds offered hereby. This section does not purport to summarize all risks that may be associated with purchasing or owning the Series 2003A Bonds and 37

42 prospective purchasers are advised to read this Limited Offering Memorandum in its entirety for a more complete description of investment considerations relating to the Series 2003A Bonds. 1. Receipt of the 2003A Special Assessments is entirely dependent upon their timely payment by the Developer or builders that purchase lots or parcels from the Developer and, ultimately, individual owners of real property within the District subject to the 2003A Special Assessments. In the event of the institution of bankruptcy or similar proceedings with respect to the Developer or any other existing or subsequent significant owner of property within the District, there could be delays in the payment of debt service requirements on the Series 2003A Bonds. As such, bankruptcy of a major landowner could negatively impact the ability of the District to foreclose on property or the ability of the County to sell tax certificates in relation to such property. In addition, the remedies available to the Owners of Series 2003A Bonds upon an event of default under the Indenture are in many respects dependent upon judicial actions, which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, the remedies specified by federal, state and local law and in the Indenture and the Series 2003A Bonds, including without limitation, enforcement of the obligation to pay Assessments, may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2003A Bonds (including the approving opinion of Bond Counsel) will be qualified as to the enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. The inability, either partially or fully, to enforce remedies available with respect to the Series 2003A Bonds could have a material adverse impact on the interest of the Owners thereof. 2. The primary security for the payment of the principal of and interest on the Series 2003A Bonds is the timely collection of 2003A Special Assessments levied by the District on certain land within the Development benefitted by the 2003A Project or any portion thereof. The 2003A Special Assessments do not constitute a personal indebtedness of the owners of the land subject thereto, but are secured by a lien on such land. The Developer expects to proceed in its normal course of business to sell to the general public lands within the District owned by it and to be served by the 2003A Project. There is no assurance that the existing or future owners of lands subject to the 2003A Special Assessments will be able to pay the 2003A Special Assessments or that they will pay such 2003A Special Assessments even though financially able to do so. The assessment of the benefits to be received by the land within the District as a result of the implementation and development of the 2003A Project is not indicative of the realizable or market value of the land, which value may be actually higher or lower than the assessment of benefits. To the extent that the realizable or market value of the land specially benefitted by the 2003A Project is lower than the assessment of benefits, the ability of the District to collect delinquent 2003A Special Assessments, if any, as the result of foreclosure actions could be adversely impacted and, provided such delinquencies are significant, the ability of the District to make the full or punctual payment of the debt service requirements on the Series 2003A Bonds could be adversely impacted. 3. The Development may be affected by changes in general economic conditions, fluctuations in the real estate market and other factors. In addition, the Development is subject to comprehensive federal, state and local regulations and future changes to such regulations. Approval is required from various public agencies in connection with, among other things, the design, nature 38

43 and extent of required public improvements, and construction of residential units in the Development in accordance with applicable zoning, land use and environmental regulations for the Development. Although no significant delays are anticipated, failure to obtain such approvals in a timely manner could delay or adversely affect the Development and/or Celebration, which may negatively impact the desire or ability of the Developer or builders with whom it has entered into contractual arrangements to pursue development of the Development as contemplated. 4. The willingness and/or ability to pay the 2003A Special Assessments of an owner of land within the District subject to the 2003A Special Assessments could be affected by the existence of other taxes and assessments imposed upon the property by the District, the County or other taxing authorities. County, municipal, school and special district taxes, special assessments and voter-approved ad valorem taxes levied to pay principal of and interest on bonds, including the 2003A Special Assessments( to the extent the same are collected by the Uniform Method), are payable at one time. Although the lien of the 2003A Special Assessments is of equal dignity with the liens for taxes and non-ad valorem special assessments upon land, tax increases or the imposition of new taxes or non-ad valorem assessments by public entities whose boundaries overlap those of the District may render landowners unwilling or unable to make 2003A Assessment payments; such failure to pay could adversely affect the ability of the District to make full or punctual payment of debt service requirements on the Series 2003A Bonds. 5. The Series 2003A Bonds may not constitute a liquid investment, and there is no assurance that a liquid secondary market will exist for the Series 2003A Bonds in the event a Holder thereof determines to solicit purchasers of the Series 2003A Bonds. Even if a liquid secondary market exists, there can be no assurance as to the price for which the Series 2003A Bonds may be sold. Such price may be lower than that paid by the current Holders of the Series 2003A Bonds, depending on the progress of the Development, existing market conditions and other factors. 6. Construction of a portion of the cost of the 2003A Project is dependent upon the Developer advancing funds to the District in anticipation of the future issuance by the District of future Series of Bonds. In the event that the Developer does not fund such advances, there can be no assurance that the District will be able to raise the moneys to complete the 2003A Project. 7. The cost of certain master and most subdivision improvements within the Development, have been and will be paid for by operating funds of, or through the proceeds of financing arranged by, the Developer. See "The Arvida Development Within Celebration" herein. There is no assurance that the Developer will be able to pay, or arrange to pay, for the cost of these improvements. 8. The obligation of the Developer to pay the 2003A Special Assessments securing the Series 2003A Bonds is the same as that of any other landowner in the Development. Neither the Developer nor any other landowner within the Development is a guarantor of, or has any personal liability for, payment of such 2003A Special Assessments. In the event of the failure of the Developer or any other landowner in the Development to pay the 2003A Special Assessments imposed on the specially benefitted lands owned by them, the District's recourse is limited solely to exercising remedies against the specially benefitted lands for which payment of 2003A Special 39

44 Assessments have not been made. See "SECURITY FOR AND SOURCE OF PAYMENT OF THE 2003A BONDS" and "BONDHOLDERS' RISKS -- Item No. 2." This section does not purport to summarize all risks that may be associated with purchasing or owning the Series 2003A Bonds and prospective purchasers are advised to read this Limited Offering Memorandum in its entirety for a more complete description of investment considerations relating to the Series 2003A Bonds. Suitability for Investment This offering is limited by the Underwriter to accredited investors within the meaning of the rules of the Florida Department of Banking and Finance. This limitation of the initial offering to accredited investors does not denote restrictions on transfer in any secondary market for the Series 2003A Bonds. Investment in the Series 2003A Bonds poses certain economic risks. Prospective investors in the Series 2003A Bonds should have such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of an investment in the Series 2003A Bonds and have the ability to bear the economic risks of such prospective investment, including a complete loss of such investment. Although no dealer, broker, salesman or other person has been authorized by the District or the Underwriter to give any information or make any representations, other than those contained in this Limited Offering Memorandum, and, if given or made, such other information or representations must not be relied upon as having been authorized by either of the foregoing, each prospective investor will be given access to such additional information, including the benefit of a site visit of the District and the opportunity to ask questions of the Developer as such investor deems necessary in order to make an informed decision with respect to the purchase of the Series 2003A Bonds. Prospective investors are encouraged to request such additional information, visit the District and ask such questions. Such requests should be directed to: Fran Busby Managing Director Prager, Sealy & Co., LLC 9907 Georgetown Pike, Suite 203 Great Falls, Virginia Telephone: Tax Matters The Internal Revenue Code of 1986, as amended (the "Code"), includes requirements which the District must continue to meet with respect to the Series 2003A Bonds after the issuance thereof Bonds in order that interest on the Series 2003A Bonds not be included in gross income for federal income tax purposes. The District's failure to meet these requirements may cause interest on the Series 2003A Bonds to be included in gross income for federal income tax purposes retroactive to their date of issuance. The District has covenanted in the Indenture to take the actions required by 40

45 the Code in order to maintain the exclusion from federal gross income of interest on the Series 2003A Bonds. In the opinion of Bond Counsel, rendered on the date of issuance of the Series 2003A Bonds, assuming continuing compliance by the District with the tax covenants referred to above, under existing statutes, regulations, rulings and court decisions, interest on the Series 2003A Bonds is excluded from gross income for federal income tax purposes. Interest on the Series 2003A Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Series 2003A Bonds is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on corporations. Bond Counsel is further of the opinion upon the date of issuance of the Series 2003A Bonds that the Series 2003A Bonds and the interest thereon are exempt from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest income or profits on debt obligations owned by corporations as defined therein. Except as described above, Bond Counsel will express no opinion regarding the federal income tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of the Series 2003A Bonds. Prospective purchasers of Series 2003A Bonds should be aware that the ownership of Series 2003A Bonds may result in other collateral federal tax consequences, including (i) the denial of a deduction for interest on indebtedness incurred or continued to purchase or carry Series 2003A Bonds or, in the case of a financial institution, that portion of an owner's interest expense allocable to interest on a Series 2003A Bond; (ii) the reduction of the loss reserve deduction for property and casualty insurance companies by fifteen percent (15%) of certain items, including the interest on the Series 2003A Bonds; (iii) the inclusion of interest on Series 2003A Bonds in the earnings of certain foreign corporations doing business in the United States for purposes of the branch profits tax; (iv) the inclusion of interest on the Series 2003A Bonds in passive investment income subject to federal income taxation of certain Subchapter S corporations with Subchapter C earnings and profits at the close of the taxable year; and (v) the inclusion in gross income of interest on Series 2003A Bonds by recipients of certain Social Security and Railroad Retirement benefits. Agreement by the State Under the Act, the State of Florida pledges to the holders of any bonds issued thereunder, including the Series 2003A Bonds, that it will not limit or alter the rights of the issuer of such bonds to own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects subject to the Act or to levy and collect taxes, assessments, rentals, rates, fees, and other charges provided for in the Act and to fulfill the terms of any agreement made with the holders of such bonds and that it will not in any way impair the rights or remedies of such holders. 41

46 Legality for Investment The Act provides that the Series 2003A Bonds are legal investments for savings banks, banks, trust companies, insurance companies, executors, administrators, trustees, guardians, and other fiduciaries, and for any board, body, agency, instrumentality, county, municipality or other political subdivision of the State of Florida, and constitute securities which may be deposited by banks or trust companies as security for deposits of state, county, municipal or other public funds, or by insurance companies as required or voluntary statutory deposits. Disclosure Required by Florida Blue Sky Regulations Section , Florida Statutes, and the regulations promulgated thereunder (the "Disclosure Act") requires that the District make a full and fair disclosure of any bonds or other debt obligations that it has issued or guaranteed and that are or have been in default as to principal or interest at any time after December 31, 1975 (including bonds or other debt obligations for which it has served only as a conduit issuer such as industrial development or private activity bonds issued on behalf of private businesses). The District is not and has not since December 31, 1975 been in default as to principal and interest on its bonds or other debt obligations. Continuing Disclosure The Act requires that financial statements of the District be audited by an independent certified public accountant at least once a year. The current fiscal year of the District commences October 1 and the audited financial statements are generally available within 180 days after the end of each fiscal year. The Act further provides that the District's budget for the following fiscal year be adopted prior to October 1 of each year. Meetings of the District's Board of Supervisors are open to the public and a proposed schedule of meetings for the year is published at the beginning of each calendar year. Notice of meetings and the agenda for meetings are published prior to each meeting. At closing, the District will enter into a Continuing Disclosure Agreement, dated as of February 15, 2003 (the "Disclosure Agreement"), the form of which is included in Appendix E. Pursuant to the Disclosure Agreement, the District has covenanted for the benefit of Bondholders to provide certain financial information and operating data relating to the District and the Series 2003A Bonds in each year (the "Annual Report"), and to provide notices of the occurrence of certain enumerated material events. Such covenant by the District shall only apply so long as the corresponding Series 2003A Bonds remain Outstanding under the Indenture. The foregoing covenant shall terminate upon the termination of the continuing disclosure requirements of S.E.C. Rule 15c2-12(b)(5) (the "Rule") by legislative, judicial or administration action. The Annual Report will each be filed by the District with each Nationally Recognized Municipal Securities Information Repository described in the Forms of Continuing Disclosure Agreements attached hereto as Appendix E as well as any state information depository that is subsequently established in the State of Florida (the "SID"). The notices of material events will be filed by the District with the NRMSIRs or the Municipal Securities Rulemaking Board, and with the SID. In accordance with 42

47 the Rule and pursuant to the Disclosure Agreement, Prager, Sealy & Co., LLC has been appointed as the dissemination agent for all of the foregoing disclosure materials but such function may also be performed by the District in the future. The specific nature of the information to be contained in the Annual Reports and the notices of material events are described in Appendix E - Form of Continuing Disclosure Agreement, which shall be executed by the District at the time of issuance of the Series 2003A Bonds. The foregoing covenants have been made in order to assist the Underwriter in complying with the Rule. In addition to the District, the District has determined that the Landowner and the Developer are obligated parties with respect to the Series 2003A Bonds and they will be obligated to provide continuing disclosure information in conformity with the Rule and are parties to the Disclosure Agreement. Enforceability of Remedies The remedies available to the owners of the Series 2003A Bonds upon an event of default under the Indenture are in many respects dependent upon judicial actions, which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including the federal bankruptcy code, the remedies specified by the Indenture and the Series 2003A Bonds may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2003A Bonds will be qualified, as to the enforceability of the remedies provided in the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors and enacted before or after such delivery. Litigation There is no litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Series 2003A Bonds, or in any way contesting or affecting the validity of the Series 2003A Bonds or any proceedings of the District taken with respect to the issuance or sale thereof, or the pledge or application of any monies or security provided for the payment of the Series 2003A Bonds, or the existence or powers of the District. Absence of Ratings No application for a rating has been made to any rating agency, nor is there any reason to believe that the District would have been successful in obtaining an investment grade rating for the Series 2003A Bonds had application been made. Underwriting Prager, Sealy & Co., LLC (the "Underwriter") has agreed pursuant to a contract with the District, subject to certain conditions, to purchase the Series 2003A Bonds from the District at a purchase price of par less Underwriter's discount of $84,490.00, plus accrued interest from February 43

48 15, The Underwriter's obligations are subject to certain conditions precedent and the Underwriter will be obligated to purchase all of the Series 2003A Bonds if any are purchased. The Series 2003A Bonds may be offered and sold to certain dealers, banks and others at prices lower than the initial offering prices, and such initial offering prices may be changed from time to time by the Underwriter. Experts The references herein to PBS&J, as the District Engineer, have been approved by said firm, and the Engineering Report, included as Appendix A to this Limited Offering Memorandum, should be read in its entirety for complete information with respect to the subjects discussed therein. Rizzetta & Company, Incorporated, has acted as Financial Consultant to the District with respect to the issuance and delivery of the Series 2003A Bonds. The Financial Consultant has also prepared the Assessment Methodology and authorized its inclusion in this Limited Offering Memorandum. Validation As required by Florida law, the Series 2003A Bonds are a portion of Bonds which were originally validated by final judgment of the Circuit Court of Osceola County, Florida entered on May 24, 1994, the appeal period for which expired with no appeal having been taken. Of the $405,500,000 previously validated, $120,865,000 aggregate principal amount of Bonds has been previously issued which applied against the issuance authority of the District. In addition, the District issued $2,760,000 of refunding bonds which did not apply against the validated issuance authority of the District. The Bonds previously issued were subject to a 20 year maturity limit as the result of both prior law limitations on the number of annual installments of Assessments and as the result of the earlier final judgment of validation. Subsequent changes in law have permitted the District to extend the number of annual installments of Assessment to no more than thirty. The 2003A Bonds are a portion of $284,635,000 principal amount of Bonds, the maturity of which may extend to the limits permitted by law, which were validated by final judgment of the Circuit Court of Osceola County on January 10, The appeal period expired on February 10, Legal Matters All legal matters related to the authorization, issuance, sale and delivery of the Series 2003A Bonds are subject to the approval of Greenberg Traurig, P.A., Miami, Florida, Bond Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Nabors, Giblin & Nickerson, P.A., Tampa, Florida. Certain legal matters will be passed upon for the District by its counsel, Hopping Green & Sams, P.A., Tallahassee, Florida, and for the Trustee by its counsel, Holland & Knight LLP Orlando, Florida. 44

49 Miscellaneous Any statements made in this Limited Offering Memorandum involving matters of opinion or estimates, whether or not expressly so stated, are set forth as such and not as representations of fact, and no representations are made that any of the estimates will be realized. The references herein to the Series 2003A Bonds and other documents referred to herein are brief summaries of certain provisions thereof. Such summaries do not purport to be complete and reference is made to such documents for full and complete statements of such provisions. This Limited Offering Memorandum is submitted in connection with the sale of the Series 2003A Bonds and may not be reproduced or used, as a whole or as a part, for any purpose. This Limited Offering Memorandum is not to be construed as a contract with the purchaser or the Owners or Beneficial Owners of any of the Series 2003A Bonds. This Limited Offering Memorandum has been duly authorized, executed and delivered by the District. CELEBRATION COMMUNITY DEVELOPMENT DISTRICT February 19, 2003 By: /s/ Hal McIntyre Chairman 45

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51 APPENDIX A ENGINEERING REPORT

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53 CELEBRATION PHASE 5 SOUTH VILLAGE 2 ENGINEERING REPORT CELEBRATION COMMUNITY DEVELOPMENT DISTRICT January 14, 2003 DISTRICT MANAGER SEVERN-TRENT ENVIRONMENTAL SERVICES, INC./ MOYER & ASSOCIATES NORTHWEST 11th MANOR CORAL SPRINGS, FLORIDA DISTRICT ENGINEER PBS&J 482 SOUTH KELLER ROAD ORLANDO, FLORIDA DISTRICT REPRESENTATIVE WALT DISNEY IMAGINEERING 200 CELEBRATION PLACE CELEBRATION, FLORIDA 34747

54 TABLE OF CONTENTS Page Table of Contents List of Tables List of Figures TC-1 TC-3 TC-4 Section Title Page 1 Introduction 1.1 Introduction Celebration Phase Celebration Phase Celebration Phase Celebration Phase Celebration Phase 5 South Village Celebration Future Phases Overall Celebration Project Development Description 2.1 General Enterprise Community Development District Celebration Place Celebration Community Development District Celebration Village Celebration West Village Lake Evalyn North Village South Village Roseville Corner East Village East Village South Village Future Developments 2-4 TC-1

55 TABLE OF CONTENTS (Continued) Section Title Page 3 Overall Celebration Project Proposed Improvements 3.1 General Project Improvements Parcel Specific Primary Infrastructure Mainline Extensions Ownership and Maintenance Phase 5/South Village 2 (2003 Assessments) Project Description 4.1 General South Village 2 Improvements Permitting Construction Status Engineer's Certification 5.1 Engineer's Certification 5-1 TC-2

56 LIST OF TABLES Table Title Page 2-1 Celebration Community Development District - Absorption Schedule Enterprise Community Development District - Absorption Schedule Ownership and Maintenance Celebration Improvement Costs Celebration Phase 5 South Village 2 Improvements Total Construction Costs Summary Celebration Phase 5 South Village 2 Improvements Work Element Celebration Special Assessment 2003 A South Village 2 Improvements Parcel Benefit Allocation Celebration Phase 5 South Village 2 Improvements Description Celebration and Enterprise Community Development District Permitting Status 4-7 TC-3

57 LIST OF FIGURES Figure Title Page 1-1 Location Map Village Location Map Phase 1 Project Limits Phase 2 Project Limits Phase 3 Project Limits Phase 4 Project Limits A Phase 5 South Village 2 Project Limits B Phase 5 South Village Assessments Future Phase a Enterprise CDD Boundaries b Enterprise CDD Boundaries Celebration CDD Boundaries Master Roadway Plan Stormwater Master Plan Master Utility Plan 3-15 TC-4

58 Section 1 INTRODUCTION 1.1 INTRODUCTION Celebration is approximately 8,075 acres of a planned, mixed-use development located in the northwest corner of Osceola County as shown on Figure 1-1. The approximate developable area is 3,954 acres. Development has begun on the east side of Interstate 4 and is made up of several Villages (also referred to as parcels). Village developments includesinglefamilyandmulti-family residential units, commercial, office, retail, a health facility, civic facilities, a Town Center area, an eighteen-hole golf course, and the amenities associated with a large, mixed-use development. Celebration is comprised of two community development districts ( CDD s or the Districts ), the Celebration CDD and Enterprise CDD which were established by rule of the Florida Land and Water Adjudicatory Commission effective March 29, 1994, pursuant to the provisions of Chapter 190, Florida Statutes. Creation of these districts provides an efficient mechanism for managing and financing the public infrastructure associated with the planning and development of Celebration. The Districts' general limits are delineated on Figure 1-1; the Celebration CDD is predominantly residential mixed use in nature, while the Enterprise CDD includes more diverse, predominately commercial and mixed-use land uses such as office, retail, and health care facilities. This Engineering Report has been prepared to identify the public infrastructure necessary to support the Celebration development programs. This report describes the Celebration project, its overall infrastructure improvements, the completed Phase 1 and Phase 2 improvements, the partially constructed Phase 3 and 4 public infrastructure construction, and the Phase 5/South Village 2 project as designed. The Phase 5/South Village 2 financing program will be comprised of several funding sources: Celebration Community Development District Special Assessment Bonds, Series 2003 A Developer Advances or future Celebration Community Development District Special Assessment Bonds Enterprise Community Development District Utility Revenue Bonds, Series 1999 Private Funds Phase 5/South Village 2 lands will be developed by St. Joe/Arvida Company, L.P. ("Arvida") on behalf of the landowner ("St. Joe"). Celebration has been under development by The Celebration Company since 1994 and other various developers. Walt Disney Imagineering has been retained as the District Representative to assist the Districts in the infrastructure development of the Districts for Phases

59 Celebration is being developed in several phases, spanning approximately 15 years. Each phase encompasses one or more Villages or portions thereof. Bonds are being issued for each phase of the project. It should be noted that each phase is being developed and completed without reliance on subsequent phases for a viable development. Similarly, installing the infrastructure by village and/or by phase has not adversely affected future phases of the project. Celebration is currently comprised of twelve villages, currently named as follows: Enterprise CDD Phase 1 Celebration Place Celebration CDD Phase 1 Phase 2 Celebration Village Celebration West Village LakeEvalyn North Village Phase 3 & 4 South Village 1 South Village Multi-Family South Village Commercial Phase 4 Roseville Corner East Village East Village 2 Phase 5 South Village 2 Future Phase Island Village Figure 1-2 provides a general location of each village within Celebration. A project of this type generally requires many permits through federal, state and local agencies. The necessary permits for Phase 1, Phase 2 and Phase 3 have been acquired. The necessary permits for Phase 4 have been acquired, with the exception of portions of East Village and East Village 2, which are still being prepared or in process. Identification of the various Phase 5/South Village 2 permits and their status has been included in this report (see Section 4). Design and permitting the primary roadways of Phase 4 improvements have been completed. Design and permitting of East Village has been completed. Design and permitting of Roseville Corner is complete. Design and permitting of East Village 2 is currently underway. Design and permitting of Phase 5/South Village 2 is currently underway. 1-2

60 1.2 CELEBRATION - PHASE 1 The construction fund portion of the initial public offerings for special assessment and utility revenue bonds (the Series 1994 Special Assessment Bonds and Utility Revenue Bonds), which provided funds for development of Celebration Place, Celebration Village, Celebration West Village and Lake Evalyn are over 99% committed. Infrastructure development within Celebration Place and Celebration Village is complete. Cost savings and project scope revisions allowed for acceleration of improvements within Celebration West Village and Lake Evalyn improvements within Phase 1. These improvements and project acceleration were addressed in the November 30, 1995 revision to the Phase 1 Engineering Report. Infrastructure development within Celebration West Village and Lake Evalyn started in June 1996 and is complete. Figure 1-3 indicates the general scope and limits of the Phase 1 project. 1.3 CELEBRATION - PHASE 2 The public offering for the Celebration Special Assessment Bonds, Series 1997 A and Series 1997 B (collectively, the Series 1997 Bonds ) and the remaining Enterprise Community Development District Series 1994 Bonds provided the necessary funding for the Phase 2 infrastructure serving North Village and the extension of Celebration Boulevard to the World Drive Extension/Interstate 4 interchange. Also included in the Series 1997 Bonds are costs to reimburse the Reedy Creek Improvement District, a public corporation, for the design and construction of a portion of the World Drive Extension/I-4 Interchange which was necessary to access, and connect to, the Celebration Boulevard South as well as the first phase of beautification improvements to the US 192 shared improvements. The Phase 2 improvements funded from the Series 1999 Bonds are complete. The ECDD Utility Revenue Bonds, Series 1999 included funds to reimburse the costs associated with the Phase 2 utility system improvements. Utility improvements for Phase 2 began in 1997 and are complete. Figure 1-4 indicates the general areas of the Phase 2 Project. All improvements funded by the Series 1997 Bonds are located within, or provide benefit to, Celebration CDD lands. 1.4 CELEBRATION - PHASE 3 The CCDD Special Assessment Bonds, Series 1999 and the ECDD Utility Revenue Bonds, Series 1999 fund the Phase 3 development. Phase 3 consists of infrastructure improvements for South Village 1, South Village Multi-Family, South Village Commercial and the design and partial construction of Celebration Boulevard. Figure 1-5 indicates the general areas of the Phase 3 project. The Phase 3 improvements are complete. 1-3

61 1.5 CELEBRATION PHASE 4 The CCDD Special Assessment Bonds, Series 2002 A and ECDD Utility Revenue Bonds, Series 1999 fund the Phase 4 development. The Phase 4 development consists of the following areas: East Village Infrastructure East Village 2 Infrastructure Roseville Corner Infrastructure Celebration Boulevard Expansion and Extension US 192 Shared Area Phase II Improvements Phase 4 improvements are 70% complete. In previous Engineer s Reports, East Village, East Village 2 and Roseville Corner were considered as part of South Village 2. South Village 2 is now considered to be a discreet village referred to as "Phase 5" or "South Village 2". Figure 1-6 indicates the general areas of the Phase 4 project. 1.6 CELEBRATION PHASE 5/SOUTH VILLAGE 2 The CCDD Special Assessment Bonds, Series 2003 A, Developer Advances, and the ECDD Utility Revenue Bonds, Series 1999 will provide the necessary funding for South Village 2 development. Figure 1-7A indicates the general areas of South Village 2 development. The Phase 5 improvements include: Roadway Potable water Wastewater collection and transmission Reuse water Parcel earthwork Stormwater management Streetlight and alley lighting Landscaping/hardscaping of public areas The Phase 5 improvements are fully designed and is in process of construction bidding. Construction is expected to commence in December CELEBRATION FUTURE PHASES The future phase of work anticipated for the remainder of Celebration includes Island Village. Figure 1-8 indicates the general areas of future phases of work. 1-4

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71 Section 2 OVERALL CELEBRATION PROJECT DEVELOPMENT DESCRIPTION 2.1 GENERAL This Engineering Report includes descriptions for both the Enterprise CDD and the Celebration CDD as the Celebration project encompasses both Districts. Figure 1-1 provides a location map for the two Districts. The Celebration CDD comprises approximately 6,548 acres. Approximately 4,157 acres are set aside as conservation areas for the Reedy Creek Improvement District and there are approximately 2,391 developable acres within the Celebration CDD. The Enterprise CDD comprises approximately 1,527 developable acres. The proposed absorption schedules for the Enterprise and Celebration CDDs are provided in Table ENTERPRISE COMMUNITY DEVELOPMENT DISTRICT The Enterprise Community Development District (Enterprise CDD) was established by rule of the Florida Land and Water Adjudicatory Commission effective March 29, 1994, pursuant to the provisions of Chapter 190, Florida Statutes and consists of approximately 1,527 acres of developable land located in unincorporated Osceola County. The limits of this District are provided on Figures 2-1a and 2-1b. The Enterprise CDD is anticipated to provide for the development of office, medical, retail, recreational, commercial, and other facilities. Development of Celebration Place commenced in Phase 1. The Enterprise CDD is the owner and operator of the utility systems (potable water, wastewater and reuse water) within the entire Celebration development. The Enterprise CDD has a utility contractor (SEVERN-TRENT) to provide daily operation and maintenance services on the utility systems. The initial systems were constructed and placed in service during 1995/1996 to support the Phase 1 development (Celebration Place, Celebration Village, Celebration West Village and Lake Evalyn). The Phase 2 utility systems have been constructed and were placed in service in 1997/1998 to support the development (North Village). The Phase 3 utility systems have been constructed and were placed into service in 2000 to support the proposed development (South Village 1). Refer to Section 3 for specific information on the utility systems. Phase 4 and Phase 5 utility systems are being designed and/or are under construction Celebration Place Celebration Place is located directly south of U.S. 192 and east of Interstate 4. Celebration Place may offer approximately 979,000 square feet of office space and commercial space. Currently, three office buildings with approximately 575,000 square feet have been constructed and occupied. Phase 1 of the medical center (approximately 488,000 square feet) has been completed. The remaining development of Celebration Place is scheduled to extend through

72 2.3 CELEBRATION COMMUNITY DEVELOPMENT DISTRICT The Celebration Community Development District (Celebration CDD), pursuant to the provisions of Chapter 190, Florida Statutes, was established by rule of the Florida Land and Water Adjudicatory Commission March 29, The Celebration CDD comprises approximately 6,548 acres within Osceola County, Florida. A map showing the limits of the Celebration District is provided on Figure 2-2. The Celebration CDD is anticipated to have a unique mix of single and multi-family residences, with support facilities, civic facilities, retail establishments, recreational amenities and schools. This mix is currently divided into twelve "villages": Celebration Village, Celebration West Village, Lake Evalyn, North Village, South Village 1, South Village 2, South Village Multi-Family, South Village Commercial), Roseville Corner and East Village, East Village 2 and Island Village. A brief description of each village is provided herein. A graphic location of the villages is provided on Figure 1-2 as previously identified Celebration Village/Phase 1 Celebration Village is located directly south of Celebration Place, buffered by the 18-hole golf course along the village s northern boundary. Development of Celebration Village consists of approximately 360 single-family residences, 560 multi-family units and 424,816 square feet of commercial and retail development (plus a 115 room hotel). The retail/commercial area known as Town Center is located in the Southern portion of Celebration Village. The initial phase of development of the Town Center retail area has been completed, leased and occupied. Celebration Hotel project consisting of 115 rooms was completed in late The golf course facility is complete as well as the Lakeside Park area located in the southeastern portion of Celebration Village. The Celebration School completed its construction and opened in Celebration West Village/Phase 1 Celebration West Village is located west of Celebration Village between the southwestern portion of the golf course and the existing wetlands. Celebration West Village includes 95 single-family residences and the west portion of the school site. As a result of cost savings and project scope revisions, acceleration of the Celebration West Village infrastructure improvements into Phase 1 was accomplished. Construction of the public infrastructure improvements are complete. No retail or commercial establishments are included in the Celebration West Village development. 2-2

73 2.3.3 Lake Evalyn/Phase 1 Lake Evalyn is a residential area located to the southeast of Celebration West Village and includes 56 single-family residences. As a result of cost savings and project scope revisions, acceleration of the Lake Evalyn infrastructure improvements into Phase 1 was accomplished. Construction of the public infrastructure improvements are complete. All 56 single-family residences are built. No retail or commercial establishments are in the proposed Lake Evalyn development North Village/Phase 2 North Village, located east of Celebration Village and southeast of Celebration Place, includes 363 single-family residences, 315 multi-family units and a small commercial site. A portion of the single-family residences border the eastern portion of the Golf Course. As a result of cost savings and project scope revisions, acceleration of a portion of North Village infrastructure improvements into Phase 1 was accomplished. Construction of both Phase 1 and Phase 2 public infrastructure improvements are substantially complete. As of September 2002, substantially all single-family residences are occupied or under contract. The multi-family construction is anticipated to be complete in late The small commercial site has been developed as an 12,858 square feet childcare center, and is complete South Village/Phase 3&4 South Village is located south and slightly west of the Celebration West Village and is comprised of the following villages: South Village 1 South Village Multi-family South Village Commercial South Village 1, which is under construction and part of Phase 3, includes 664 single-family residences and terrace units. The construction of the infrastructure in the area is complete. South Village Multi-family (northwest of South Village 1) is currently under construction. South Village Commercial, located along Interstate 4 adjacent to the interchange at World Drive and Interstate 4, is anticipated to include approximately 1,017,652 square feet of commercial space and 1,000 hotel units. South Village Commercial infrastructure will be constructed in several phases and should be complete in Roseville Corner/Phase 4 Roseville Corner is located south of South Village 1 and includes 99 single-family bungalow units. A portion of the lots border wetlands to the north and east. Construction of the public infrastructure improvements are complete. As of September 2002, substantially all single-family residences are occupied or under construction. No retail or commercial establishments are included in this development. 2-3

74 2.3.7 East Village/Phase 4 East Village is located south of West Village and east of South Village. East Village currently proposes 386 single-family residences and 86 terrace units. Construction is currently underway for the initial phase East Village 2/Phase 4 East Village 2 is located southeast of East Village. East Village 2 currently proposes 79 singlefamily residences. Design and permitting began in summer South Village 2/Phase 5 South Village 2 is located south of South Village and Roseville Corner. South Village 2 currently proposes 314 single-family residences and 302 multi-family units. No commercial development is contemplated for South Village/Phase 5. Design and permitting is currently underway Future Developments The future development within Celebration is Island Village. This future work is planned to be designed and built within five years. The improvements for this future development are not included in this bond issue. 2-4

75 CELEBRATION CDD Table 2-1 Celebration Community Development District Absorption Schedule Thru Future Total Residential Celebration Village Estate Village Cottage Garden 0 0 Townhouse Apartments Town Center Apartments Subtotal Celebration West Village Estate Village Cottage Garden 0 0 Townhouse 0 0 Apartments 0 0 Subtotal Lake Evalyn Estate 0 0 Village 0 0 Cottage 0 0 Garden Townhouse 0 0 Apartments 0 0 Subtotal North Village Estate Village Cottage Garden Townhouse Apartments Subtotal

76 Table 2-1 Celebration Community Development District Absorption Schedule (Continued) CELEBRATION CDD Thru Future Total Residential South Village Estate Village Cottage Garden Bungalow Townhouse Terrace Subtotal Roseville Corner Estate 0 Village 0 Cottage 0 Garden 0 Bungalow Townhouse 0 Apartments/Terrace 0 Subtotal East Village Estate Village Cottage Bungalow Garden Townhouse Terrace Subtotal East Village 2 Estate 9 9 Village Cottage 0 0 Bungalow 0 0 Garden Townhouse 0 0 Terrace 0 0 Subtotal

77 Table 2-1 Celebration Community Development District Absorption Schedule (Continued) CELEBRATION CDD Thru Future Total Residential (Continued) South Village 2 Estate Village Cottage Bungalow Garden Townhouse Multi-family Subtotal South Village Multi-Family (along Celebration Boulevard South) Non-Residential Celebration Village Commercial Church (sq. ft.) 22,500 22,500 School (acres) High School (acres) 34.6 Golf Course (each) 1 1 Golf Course Clubhouse (each) 1 1 Golf Maintenance Facility (each) 1 1 Lakeside Recreation Center (each) Building (sq. ft.) ,000 Celebration Business Center (s.f.) ,120 Town Center Commercial Office (sq. ft.) ,468 Retail (sq. ft.) ,578 Cinema (sq. ft.) ,150 Inn (rooms) Stetson (sq. ft.) ,000 Undesignated: Retail (sq. ft.) ,000 Other Commercial (sq. ft.) ,000 North Village Commercial Sites (sq. ft.) ,000 22,858 East Village Commercial Sites (sq. ft.) 35,000 35,000 South Village Commercial Sites (sq. ft.) 150, ,925 10, ,000 90, , , ,227 88,500 1,017,652 South Village Commercial Sites (rooms)

78 Table 2-2 Enterprise Community Development District Absorption Schedule ENTERPRISE CDD Thru Future Total Celebration Place Commercial Sites (sq. ft.) 575, , , , ,000 Celebration Place Warehouse Sites (sq. ft.) 70,000 70,000 Fire Station (sq. ft.) 8,000 8,000 Health Center (sq. ft.) 488, , ,

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82 Section 3 OVERALL CELEBRATION PROJECT PROPOSED IMPROVEMENTS 3.1 GENERAL This section is intended to provide a general description of the overall Celebration improvements and the amount of bond proceeds that have been spent or are under contract for each phase (i.e., "committed"). As more fully described below, the Phase 1 Improvements are substantially complete and over 99% of the bond funds for that Phase are committed. The same is true for the Phase 2 Improvements (over 99% committed). For Phase 3, approximately 95% of the bonds issued for these Improvements are committed. For Phase 4, approximately 85% of the bonds issued for these improvements are committed. For Phase 5/South Village 2 Improvements to be funded with the Series 2003A Bonds, approximately $1 million has been advanced for design of these Improvements. In addition, the Enterprise CDD 1999 Utility Bonds have been used as planned for the installation of the utilities in Phase 5. Note that all improvements are public in nature. For a specific description of the Phase 5/South Village 2 Improvements, please refer to Section 4. The Phase 1 improvements located in Celebration Place and Celebration Village as described in the original Phase 1 Engineering Report dated June 15, 1994 are substantially complete. The November 30, 1995 revised Engineering Report approved by Enterprise and Celebration Community Development Districts included the improvements in Celebration West Village, Lake Evalyn and a portion of North Village. These improvements were accelerated into Phase 1 and are substantially complete. The Phase 2 improvements located in North Village and including Celebration Boulevard South as described in the Phase 2 Engineering Report dated June 1997 are substantially complete. The type of improvements proposed for Celebration to be constructed, as well as those completed within Phase 1 and 2, by the Districts include, but may not necessarily be limited to, the following: Primary roadways and bridges Parcel (Village)-specific roads and bridges Streetlights and alley lighting Domestic water distribution system Wastewater/sanitary sewer collection system Reuse (reclaimed) water distribution system Stormwater management facilities Drainage collection systems Off-site roadways and intersection improvements Wetland compliance Common area development Fire/EMS Service facilities 3-1

83 Phase 3 improvements were divided into several construction packages consisting of the following improvements: Roadway Potable water Wastewater collection and transmission Reuse water Parcel earthwork Stormwater management Streetlight and alley lighting Landscaping/hardscaping of public areas (North Village) Phase 2 utility improvements reimbursements The Phase 3 specific areas of improvements included parcel development of South Village 1, South Village Multi-Family, South Village Commercial, the south expansion of Celebration Boulevard, design of Celebration Boulevard expansion, and the design of Celebration Place expansion. The Phase 4 improvements are being divided into several construction packages. These packages consist of but are not limited to the following improvements: Roadway Potable water Wastewater collection and transmission Reuse water Parcel earthwork Stormwater management Streetlight and alley lighting Landscaping/hardscaping of public areas The Phase 4 specific areas of improvement include Roseville Corner, East Village, East Village 2, Celebration Roadway Improvements (widening of Celebration Place and the widening and extension of Celebration Boulevard) and US 192 shared improvements as shown on Figure 1-6. The proposed Phase 5/South Village 2 specifies areas of improvement will also be divided into several construction packages. These packages consist of but are not limited to the following improvements: Roadway Potable water Wastewater collection and transmission Reuse water Parcel earthwork Stormwater management Streetlight and alley lighting Landscaping/hardscaping of public areas 3-2

84 The proposed Phase 5/South Village 2 specific area of improvement is shown in Figure PROJECT IMPROVEMENTS Parcel Specific The parcel specific improvements are those public infrastructure improvements specifically related to a given village or land use parcel. Examples of parcel specific improvements include roadways and bridges, potable water, wastewater, reuse, and electrical utilities, earthwork, stormwater collection systems, and landscaping/hardscaping of public areas. Further description of the parcel specific improvements is as follows: Roads and bridges: The improvements include the parcel's collector roads and secondary residential streets and alleys, streetlights, and regulatory and directional signage. Utilities: The improvements include potable water distribution, wastewater/sanitary sewer collection and transmission, reuse water distribution and primary electrical distribution systems. Site Development: The improvements include site earthwork for stormwater runoff collection and control, stormwater management and drainage collection systems, landscape and irrigation, hardscape, jogging and nature trails, entry features and parks. Parcel specific public infrastructure improvements have been installed for Phase 1 areas of Celebration Place, Celebration Village, Celebration West Village, Lake Evalyn and North Village. The improvements for the Phase 2 areas of North Village and Celebration Boulevard South are also complete. The majority improvements for Phase 3 areas of South Village 1, South Village Multi- Family, and South Village Commercial are also complete. Improvements for Phase 4 areas of East Village 1 are near completion and design of East Village 2 is on-going Primary Infrastructure The primary infrastructure improvements are defined as those which benefit and provide access for the District. The primary infrastructure consists of the following categories and is further described herein: Primary roadways and bridges Utility relocations Common area development Primary road related utilities General infrastructure Fire/EMS Service Facility 3-3

85 Primary Roadways and Bridges The Districts will be constructing all paving, grading, and drainage systems associated with the following roadways except as otherwise indicated. Future roadways will consist of a stabilized subgrade, soil cement base and asphaltic concrete surface course, consistent with the specifications of the existing roadways. Signage, pavement markings, guardrails, sidewalks, and traffic signals will also be constructed consistent with the specifications of the respective existing improvement. The designs of the existing district roadways have been prepared in accordance with the current State of Florida Manual of Minimum Standards for Design, Construction and Maintenance of Streets and Highways, Osceola County Road Construction Specifications, AASHTO policies, and the Manual on Uniform Traffic Control Devices. A Master Roadway Plan has been prepared to determine the roadway network geometry and capacity to support the transportation needs of the buildout of Celebration. The master roadway plan is illustrated on Figure 3-1. Celebration Boulevard Initially a two lane, both divided and undivided thoroughfare, Celebration Boulevard is approximately 16,800 feet long and provides access from (and within) North Village, Celebration Village, West Village and South Village, currently terminating at a point north of Island Village. The widening of Celebration to four lanes has been completed. Additionally, a right-of-way corridor for a connection from North Village to U.S. 192 has been planned; however, the connection will only be completed should traffic generation warrant. The Phase 1 improvements included the initial two lanes of Celebration Boulevard from its intersection with the South Village entrance to Celebration Place. This section of Celebration Boulevard is open to traffic. Also included were the four lane improvements within North Village, known as Celebration Boulevard East, which are complete and open to traffic. The Phase 2 improvements, known as Celebration Boulevard South, included the initial two lanes from the World Drive-Interstate 4 interchange to its intersection with the South Village entrance. This section also is complete and open to traffic. The engineering design and construction for the intersection improvements of Celebration Boulevard South at the Interstate 4 (I-4) interchange and the engineering design for the expansion of Celebration Boulevard are part of Phase 3 and 4. Celebration Place Initially Celebration Place was initially a two-lane undivided road, extending from Celebration Boulevard to the bridge over the C-2 Canal, with an approximate length of 3,250 feet. Generally, from this point to its intersection with Celebration Avenue, Celebration Place is a four-lane divided road, approximately 4,100 feet in length. Widening of the twolane portion to four lanes has recently been completed. The construction of Celebration Place described above is complete and open to traffic. The engineering design of the additional two lanes from Celebration Boulevard to a point east of the C-2 Canal bridge is complete. 3-4

86 World Drive Extension/I-4 Interchange This interchange provides access to and from I-4 at a point between the Reedy Creek and the Southern Connector Extension (S.R. 417). Additionally, the interchange connects to Celebration Boulevard, providing access to I-4 from the CCDD and to World Drive Extension from the ECDD. This interchange was constructed by the Reedy Creek Improvement District on behalf of the FDOT, and is open to traffic. The Series 1997 Bonds provided funding for the Celebration CDD s share of the cost. Funding for the Enterprise CDD s share of the cost was provided from the Series 1994 Bond funds. World Drive Extension Road B-1 From the I-4 interchange to its intersection with Road B-1 (see Figure 3-1), this roadway has a four-lane divided urban section, expandable to six lanes, with an approximate length of 3,100 feet. From Road B-1 to the US 192 interchange, this road has a rural, four-lane divided typical section, expandable to six lanes, with an approximate length of 2,300 feet. This roadway was constructed by the Reedy Creek Improvement District, and is open to traffic. The Series 1997 bonds provided funding for the Celebration CDD s share of the cost. This portion of Road B, located west of World Drive Extension, connects US 192 with World Drive Extension. Its typical urban section consists of two lanes, expandable to four lanes. Approximate length is 5,100 feet. This roadway was constructed by the Reedy Creek Improvement District, and is open to traffic. The Series 1997 bonds provided funding for the Celebration CDD s share of the cost. Celebration Avenue Celebration Avenue is a four-lane divided road, extending from US 192 to the intersection with Celebration Boulevard, and provides access to the Southern Connector Extension (S.R. 417). The portion of Celebration Avenue from the Southern Connector Extension to US 192 was completed by the Florida Turnpike Authority as part of the Southern Connector Extension (S.R. 417) project. The portion of Celebration Avenue from the Southern Connector Extension (S.R. 417) to Celebration Boulevard was included in the Celebration Phase 1 public infrastructure improvements. Celebration Avenue is complete and open to traffic. Stormwater Drainage and Earthwork In 1993, Disney Development Company (now known as Walt Disney Imagineering, the Celebration CCD District Representative,) and its assigns received formal approval of the Celebration Stormwater Master Plan from the Reedy Creek Improvement District, as illustrated on Figure

87 The purpose of the Celebration Stormwater Master Plan is to assure that adequate stormwater management facilities are available to provide stormwater management capacity for the buildout development of Celebration and to meet the regulatory requirements of the project, as listed below: Reedy Creek Improvement District (RCID) South Florida Water Management District (SFWMD) Osceola County Florida Department of Environmental Protection (FDEP) U. S. Army Corps of Engineers (ACOE) U. S. Environmental Protection Agency (EPA) The Celebration Stormwater Master Plan identifies peak discharge rates, water quality requirements, 100-year floodplain elevations, groundwater flows. More specifically, the plan includes: location and size of ponds and lakes required for stormwater management facilities; control elevations of ponds and lakes including required water quality treatment volumes; peak flow rates, flow volumes and stages for flood events determined within each basin and within major conveyance areas (i.e., Reedy Creek, C-1 Canal and C-2 Canal); compensating storage requirements to mitigate for encroachments into the 100-year floodplain in the basins which encroachments occur; wetland evaluations to show that hydroperiods and viability of wetlands are being maintained; groundwater impacts quantified as to the effects on flow rates and wetland impacts. Existing drainage patterns within the Enterprise Community Development District (west side of Interstate 4) generally flow from the northeast to the southwest. All stormwater runoff enters the Celebration Community Development District via Reedy Creek. Existing drainage patterns within the Celebration Community Development District are generally from northwest to southeast, with all stormwater runoff entering Reedy Creek via the Reedy Creek Swamp, the C-1 Canal, the C-2 Canal or sheet flow into the Swamp. Discharge from the Reedy Creek Swamp to the continuation of Reedy Creek beyond RCID's boundaries is controlled by RCID Structure S-40. For each phase, final design of the proposed stormwater drainage system for the Districts has been, and will be reviewed and approved by RCID, SFWMD, and Osceola County prior to construction. The drainage system will be consistent with the Celebration Stormwater Master Plan and will maintain existing drainage patterns to the greatest extent possible. The removal of surface drainage from the roadways will be accomplished by storm sewer systems including curb and gutter, inlets and pipes along each side of the roadways that will collect and convey surface drainage to stormwater retention ponds located along the roadways. Protection of the road base material from undermining will be accomplished by underdrain systems as needed along each side of the roadways. The underdrain system will bleed off excess groundwater and discharge to the roadside storm sewer system. 3-6

88 In several areas, the removal of surface drainage from the roadways, and the protection of the road base material from undermining on those roadways, will be accomplished by grassed swales along each side of the roadways. This system will bleed off excess groundwater and convey surface drainage to stormwater retention ponds located along the roadways. The stormwater retention ponds will be wet detention biological treatment facilities designed to provide for the treatment of stormwater according to Chapter 40E-4 of the Florida Administrative Code. This treatment is required prior to discharge to the Reedy Creek Swamp and associated canals. In addition to the wet detention treatment process, alternative stormwater treatment methods will be considered. Alternative treatment methods include stormwater irrigation reuse, in which stormwater management ponds are utilized as a source of irrigation water, and; alum injection, in which alum is injected into stormwater runoff as it enters ponds. To date, the stormwater management facilities required to support the Phase 1 thru Phase 3 public infrastructure improvements in Celebration Place, Celebration Village, Celebration West Village, Lake Evalyn and North Village and Celebration Boulevard South have been completed. Common Area Development Common area development as it relates to that portion of the primary infrastructure generally includes the following: Common area development for the right-of-ways of primary roadways including: landscaping, irrigation system including controls, piping, and heads; and transit stops. Entry features at intersection with U.S. 192 and World Drive Extension/Interstate 4 Interchange and major points along the roadways. Landscape screening for above ground utility appurtenances. Sidewalks and hardscape along primary roads. To date, the common area improvements generally consisting of landscaping, irrigation, sidewalks, hardscape and entry features in Celebration Place, Celebration Village, Celebration West Village, Lake Evalyn, North Village, Celebration Boulevard South, South Village have been completed. 3-7

89 Road related utilities The road related utilities include the underground primary electrical duct bank system necessary to support the primary electrical distribution system, street lighting and signalization within the project. General Infrastructure General infrastructure may be described as those elements of design and engineering that are necessary to support the primary infrastructure work and the parcel development work. Examples of elements of general infrastructure include work such as conceptual engineering, scheduling, piezometer installation and monitoring, preliminary and final topographic surveys, and other miscellaneous professional services. Primary Utilities Construction of the primary infrastructure improvements identified as potable water, wastewater and reuse water, is completed by the Enterprise CDD and provided to the Celebration CDD through an interlocal agreement. The potable water, wastewater and reuse water are supplied to the Enterprise CDD by the City of Kissimmee pursuant to a Large User Agreement between the Enterprise CDD and the City of Kissimmee. A Celebration Master Utility Plan (MUP) has been prepared to determine the necessary potable water, wastewater and reuse water infrastructure to meet the utility demands for the buildout development of Celebration. The master utility mains are shown on Figure 3-3. The primary utility improvements (potable water, wastewater, reclaimed water, electrical and telecommunications) in Celebration Place, Celebration Village, Celebration West Village, Lake Evalyn, North Village, and Celebration Boulevard South and South Village have been completed. The Enterprise CDD has a utility contractor (Severn-Trent) to provide daily operation and maintenance services on the utility systems. The Enterprise CDD completes its own meter reading, billings and collections for utility service within Celebration. The Enterprise CDD prepares on an annual basis, 5-year flow projections to the City of Kissimmee to reserve treatment plant capacities for the proposed development in the Celebration Absorption Schedule. The City of Kissimmee currently has capacity for the Celebration project and we do not anticipate any capacity issues through completion of the project. The potable water infrastructure mains range in size from 6" through 24" in diameter. All new potable water mains will be in accordance with the Florida Department of Environmental Protection and Osceola County requirements, meet the design criteria set forth in the Districts' Permit Criteria Manual and include the appurtenant fittings, meters, valves, and valve boxes to effect service to the respective properties and parcels contiguous to the roadways listed in Section During a fire flow event, potable water will be provided at a pressure of no less than 20 psi at the connection of each village to the primary infrastructure. The determination of fire flow requirements is based on the National Fire Protection Association (NFPA) manual. All new central wastewater collection and transmission systems will be installed within the 3-8

90 roadways described in Section The systems will include a series of publically owned manifolded pump stations. Each pump station will collect the raw wastewater within its service area (generally a specific village or portion thereof). The primary infrastructure includes force mains, ranging in size from 6" though 16", and pump stations, as well as the appurtenant fittings, valves, and flow meters required to connect the primary infrastructure to the City of Kissimmee s wastewater system. All new reclaimed water systems will deliver reuse water from the City of Kissimmee s facility to the Districts and its villages via a looped distribution system located within the roadways described in this section. The reclaimed water main piping system includes pipes, ranging in size from 4" to 16" in diameter. The proposed systems will include appurtenant valves, valve boxes, fittings and meters to effect service to the respective properties and parcels contiguous to the roadways listed in this section. All new electrical primary and secondary distribution systems and electric service will be provided by Florida Power Corporation (FPC). The proposed systems will consist of direct buried cable and conduit with appropriately spaced pullboxes, switchgear and transformers. All designs and construction will be completed by FPC. The incremental costs of the electrical improvements between overhead and underground facilities will be funded by the Districts. FPC has completed overall electrical system master planning for Celebration to ensure electric service for the proposed buildout of Celebration. The systems installed as part of the Phase 1, Phase 2, Phase 3 and Phase 4 development have been sized to accommodate the proposed development identified in the Celebration Absorption Schedule. All new telecommunications primary and secondary distribution systems and communications service will be provided by Smart City Telecommunications. The systems will consist of ductbank system with pullboxes and direct buried cable with appropriately spaced telecommunications equipment. All designs and construction will be completed by Smart City Telecommunications. Smart City Telecommunications has completed overall telecommunications master planning for Celebration to ensure communications service for the proposed buildout of Celebration. The systems installed as part of the Phase 1, Phase 2, Phase 3 and Phase 4 development have been sized to accommodate the proposed development identified in the Celebration Absorption Schedule Mainline Extensions In 1993, The Celebration Company (TCC) entered into a Large User Agreement (LUA) with the City of Kissimmee (City) for the provision of water supply, wastewater treatment and disposal and effluent reuse water to the service areas including the Districts. TCC has assigned its interest in the LUA to the Enterprise CDD. The City is providing potable water to the Districts land east of Interstate 4 through the connection of its water system infrastructure to that of the Districts at the mainline connection point located east of Interstate 4. The City will provide potable water to the Enterprise CDD s land west of Interstate 4 at a proposed mainline connection point just south of U.S. 192 and west of World Drive. 3-9

91 The City, by agreement, will provide the potable water at a minimum pressure of 45 pounds per square inch (psi.) The potable water will meet required treatment levels designated by the FDEP and the SFWMD. The City is providing the wastewater treatment and disposal to the Districts land east of I-4 through the connection of the City wastewater system infrastructure to that of the Districts at the mainline connection point located east of Interstate 4. The City will provide wastewater service to the Enterprise CDD s land west of Interstate 4 at a proposed master wastewater lift station facility just south of U.S. 192 in the Enterprise CDD adjacent to Road B-1. The mainline extension pump station, located in the Enterprise CDD, pumps the raw wastewater to the City's Wastewater Treatment Facility (WWTF). The Districts have agreed to use reclaimed water from the City's WWTF for irrigation and water closet toilet flush, as permitted by law, throughout the Districts. Therefore, a reclaimed water system, similar to a potable water system, will be included as part of the wastewater system. The mainline connection system and pump stations east of Interstate 4 were constructed in 1995/1996 as part of the Phase 1 improvements and are operational. All the mainline utility improvements were designed based on the anticipated full buildout development of Celebration. There are no current anticipated issues in obtaining utility capacity from the City of Kissimmee. 3-10

92 3.2.4 Ownership and Maintenance The ownership and maintenance responsibilities for the infrastructure improvements at Celebration vary by the improvement as noted in the following: Table 3-1 Ownership and Maintenance Improvement Ownership Maintenance Roadway System - curb & gutter and pavement (back of curb to back of curb) Stormwater Management System (roadway pipes) Stormwater Management System (joint-use ponds) Osceola County Osceola County Districts Osceola County (Street sweeping will be completed by the Districts) Osceola County Districts Roadway Underdrain System Osceola County Osceola County Wastewater Collection and Transmission System Potable Water Distribution System Reclaimed Water Distribution System Enterprise Community Development District Enterprise Community Development District Enterprise Community Development District Enterprise Community Development District Enterprise Community Development District Enterprise Community Development District Mainline Utility Extensions City of Kissimmee City of Kissimmee Landscaping along rights-of-way Districts Adjacent Land Owner Park Areas Celebration Community Development District or Residential Property Owners Association Celebration Community Development District or Residential Property Owners Association Walkway and Trail System Districts Districts Alleys Celebration Community Development District Celebration Community Development District Landscaped Open Spaces Districts Districts Recreation Center Multi-Family Parcel Residential Property Owners Association Multi-Family Residential Property Owners Association Residential Property Owners Association Multi-Family Residential Property Owners Association 3-11

93 Table 3-2 Celebration Improvement Costs BOND SERIES Phase 5/South Village 2 Available Construction Funds Construction Phase ENTERPRISE WATER AND SEWER REVENUE BONDS, Series 1994 $9,076,788 PHASE 1 ENTERPRISE WATER AND SEWER REVENUE BONDS, Series 1999 $13,338,483 *** PHASE 2, 3, 4 & 5 Total $22,415,271 ENTERPRISE SPECIAL ASSESSMENT BONDS, Series 1994 $11,053,352 PHASE 1, 2, 3 & 4 Total $11,053,352 CELEBRATION SPECIAL ASSESSMENT BONDS, Series 1994 $49,273,899 PHASE 1 CELEBRATION SPECIAL ASSESSMENT BONDS, Series 1997 A & 1997 B $15,270,268 PHASE 2 CELEBRATION SPECIAL ASSESSMENT BONDS, Series 1999 $17,939,549 PHASE 3 CELEBRATION SPECIAL ASSESSMENT BONDS, Series 2002 A $15,825,398 * PHASE 4 CELEBRATION SPECIAL ASSESSMENT BONDS, Series 2003 A and Developer Advances $11,137,089 ** PHASE 5 Total $109,446,203 *Total CCDD Phase 4 construction cost is $26,341,847. $15,825,398 is funded from the Series 2002 A Bonds. **Total Phase 5/South Village 2 construction cost is $13,299,074. The other sources of funding includes Enterprise CDD $1,913,385, private funding of $248,600, and Celebration CDD Assessment $11,137,089. *** $1,868,767 of the Enterprise Water and Sewer Revenue Bonds, Series 1999 is funding South Village 2 utilities. 3-12

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97 Section 4 PHASE 5/SOUTH VILLAGE 2 (2003 A ASSESSMENTS) PROJECT DESCRIPTION 4.1 GENERAL The CCDD Special Assessment Bonds Series 2003 A (combined with utility funding from Enterprise CDD, developer advances/future Celebration CDD assessment bond issue, and a small amount of private funds) will provide the necessary funding for infrastructure for South Village 2. Utility improvements for South Village 2 will be funded by the ECDD Utility Revenue Bonds Series Phase 5/South Village 2 may be completed, with all the necessary infrastructure to support the development program, without reliance on subsequent phases. Figure 1-7A indicates the general areas to be developed as part of the South Village 2 Project. 4.2 PHASE 5/SOUTH VILLAGE 2 IMPROVEMENTS The Phase 5 improvements will be divided into several construction packages. Those packages consist of the roadway, potable water, wastewater collection and transmission, reuse water, parcel earthwork for the collection and control of stormwater runoff, stormwater management, streetlight and alley lighting, sidewalks and trails and landscaping/hardscaping of public area improvements for South Village 2. The Phase 5/South Village 2 financing program will be comprised of the Celebration CDD Special Assessment Bonds, Series 2003 A and other funding. The improvement costs and anticipated funding sources for Phase 5/South Village 2 are shown in Table 4-1. Table 4-2 provides a more detailed summary of the South Village 2 costs by funding source and by type of work element. The estimated construction costs for the South Village 2 improvements were prepared based upon master plans and preliminary engineering designs and utilized comparable unit prices from previous Phases' actual bidding results and from comparable information on similar projects within Central Florida. Table 4-4 summarizes the Parcel benefit allocations of the proposed public infrastructure improvement costs by major work element to the Celebration CDD, Series 2003 A Bonds and other sources. The benefit allocation between Districts was determined based on anticipated trip generation contained in the traffic engineering reports for Celebration. 4.3 PERMITTING Permits for Phase 5/South Village 2 are being prepared and are scheduled to be under review by the respective regulatory agencies in Fall There are no anticipated delays in permitting the District infrastructure improvements. A summary of the District wide and Phase 3, 4 and 5 permits are summarized in Table

98 4.4 CONSTRUCTION STATUS Construction is scheduled to begin in Fall 2002 and continue through Spring

99 Table 4-1 Celebration South Village 2 Improvements Total Construction Costs Summary SOUTH VILLAGE 2 South Village 2 CCDD Assessment ** 11,137,089 ECDD Utility Series 1999 * 1,913,385 Private Funding 248,600 CDD Total 13,299,074 * The $1,913,385 is a portion of Enterprise Utility Series 1999 issue. ** These amounts will be funded from both the Series 2003A Bonds as well as developer advances/future assessment bond series. 4-3

100 Table 4-2 Celebration South Village 2 Improvements Work Element SOUTH VILLAGE 2 South Major Work Element Village 2 Construction Roads and Bridges 2,672,325 Earthwork 2,176,715 Stormwater Management Systems 1,118,879 Common Area Development/Parks/Trails 2,686,257 Streetlights 457,992 Subtotal 9,112,168 Soft Costs Professional Services 935,936 Project Management 926,720 Contingency 162,265 Subtotal 2,024,921 CCDD Assessment Total 11,137,089 ECDD Utility Revenue Total 1,913,385 CDD TOTAL $13,050,

101 Table 4-3 Celebration South Village 2 Improvements Cash Flow % Allocation (CCDD Assessment) SOUTH VILLAGE 2 Quarter CCDD Assessment Total 2002 Qtr. 1 (Jan/Feb/Mar) 14,061 Qtr. 2 (Apr/May/June) 71,410 Qtr. 3 (July/Aug/Sept) 399,874 Qtr. 4 (Oct/Nov/Dec) 520,658 Subtotal 1,006, Qtr. 1 (Jan/Feb/Mar) 4,374,923 Qtr. 2 (Apr/May/June) 2,457,754 Qtr. 3 (July/Aug/Sept) 1,892,333 Qtr. 4 (Oct/Nov/Dec) 1,326,587 Subtotal 10,051, Qtr. 1 (Jan/Feb/Mar) 79,489 Subtotal 79,489 CCDD Assessment Total 11,137,

102 Table 4-4 Celebration Phase 5 Improvements Description Category Work Element Item Cost Description Parcel Specific - South Village 2 Roads & Bridges Residential Roadways and Alleys Design and construction of residential roadways and alleys, inclusive of the associated earthwork, drainage, paving, curb and gutter, sidewalks, signing, marking, signalization, roadway lighting and all other public improvements normally installed coincident with roadway improvements. Stormwater Management Stormwater System Design and construction of all of the necessary stormwater management facilities necessary to support the Phase 5 development, inclusive of ponds, control structures (weirs), storm sewer systems, retaining walls, pond plantings and all other improvements normally installed coincident with these types facilities. Common Area Development Roadway Landscaping Design and construction of the landscaping, irrigation, hardscape and all other improvements normally installed coincident with these types of improvements for residential roadways and alleys to be further detailed in design documents. Entry Features Design and construction of minor entry features and other 'themed' features inclusive of irrigation, lighting and all other improvements normally installed coincident with these types of improvements at the Village entrances. Parks and Trails Design and construction of the landscaping, irrigation, hardscape and all other improvements normally installed coincident with these types of improvements for the public parks, recreational areas, and a trail 'network'. Roadway Related Utilities Design and construction of the ductbank system for undergrounding of utilities associated with street lights, electrical and telecommunications distribution systems and traffic signalization necessary to support the Phase 5 Village development. Also includes the capital costs for the street lights for residential roadways and alleys. General Infrastructure Professional Fees Primarily design and engineering costs necessary to support the Phase 5 infrastructure development. Note: All quantities represent approximate estimates derived from current best information and are subject to change/revision as a result of final design and/or construction. Quantities have been rounded. 4-6

103 Table 4-5 Celebration and Enterprise Community Development District Permitting Status Permit Status Districts Wide Conceptual Permit- SFWMD b ACOE Long Term Permit b Received- Permit Number S Received- Permit Number (IP-GS) DEP Long Term Permit b Received- Permit Number #48, #49, and FDEP Potable Water Permit- Mainline Extension FDEP Wastewater/Reuse Permit- Mainline Extension Florida Freshwater Fish and Game Commission Permit for the Taking of Gopher Tortoises and Their Burrows - property wide Osceola County - Approved PUD Received - Permit Number WD Received - Permit Number CS Received - Permit Number OSC#4 (dated November 12, 1992) a Guides all development in Districts. Received. Village Specific (Phase 5 Improvements only) Modification to SFWMD Permit This project will modify the project wide SFWMD Conceptual Permit. South Village 2 permit will be processed fall FDEP Potable Water Permit South Village 2 permits will be processed fall FDEP Wastewater Permit South Village 2 permits will be processed fall Osceola County- Final Plat To be submitted fall Osceola County Construction Permit Permits will be processed fall ACOE & FDEP Dredge and Fill Permit Environmental Protection Agency (EPA) Dewatering Discharge Permit Notification required for each project per project wide permits. Exempt- used during construction. Water to be discharged to swales then to waters of the state resulting in a non-point discharge. a Although Districts have a permit for the taking of the gopher tortoises and their habitats; Districts are implementing a relocation plan in lieu of taking the tortoises. b Includes conditions for Walker Ranch 4-7

104 Section 5 ENGINEER'S CERTIFICATION 5.1 ENGINEER'S CERTIFICATION In our opinion, the improvements cost estimates are fair and reasonable and we have no reason to believe that the improvements described herein cannot be constructed and installed at such costs and in the construction time frames as described in this report. The estimated probable construction costs for Phase 5 were determined utilizing comparable unit prices obtained from Phase 1, 2, 3 and 4 actual bidding and contract documents and market prices within Central Florida. We expect that all improvements to be constructed with the CCDD Series 2003 A, and Developer Advances/Future Assessment Bond proceeds can be completed in We, therefore, believe that the District will be well served by the improvements discussed in this report. The improvements, if constructed to the designs described herein, will be sufficient to support the expected development program as described in Section 3 of this Engineering Report. I hereby certify that the foregoing is a true and correct copy of the Engineering Report for Phase 5 South Village 2 of the Celebration Community Development District. Kathleen S. Leo, P.E. Florida Registration No. FL51419 PBS&J 5-1

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