NEW ISSUE BOOK ENTRY ONLY

Transcription

1 NEW ISSUE BOOK ENTRY ONLY NOT RATED In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, the interest (and original issue discount) with respect to the Bonds is not excluded from gross income for federal income tax purposes. In the further opinion of Bond Counsel, such interest (and original issue discount) is exempt from State of California personal income tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest with respect to, the Bonds. See CONCLUDING INFORMATION Tax Matters herein. $6,295,000 CITY OF MALIBU ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITIES PHASE I) TAXABLE LIMITED OBLIGATION IMPROVEMENT BONDS 2016 SERIES A Dated: Date of Delivery Due: September 2, as shown inside cover The City of Malibu Assessment District No (Civic Center Wastewater Treatment Facilities Phase I) Taxable Limited Obligation Improvement Bonds 2016 Series A (the Bonds ) are limited obligations of the City of Malibu (the City ) secured by special assessments to be levied on real property located within the City of Malibu Assessment District No (Civic Center Wastewater Treatment Facilities Phase I) (the Assessment District ). The design and construction of a wastewater treatment plant, wastewater collection and recycled water distribution system and recycled water injection system (the Improvements ) being financed by the Assessment District and the levy of special assessments will be undertaken as provided by the Municipal Improvement Act of The Bonds are issued pursuant to provisions of the Improvement Bond Act of 1915 and a Fiscal Agent Agreement dated as of May 1, 2016 (the Fiscal Agent Agreement ) by and between the City and U.S. Bank National Association, as Fiscal Agent (the Fiscal Agent ) to (i) fund the Reserve Fund for the Bonds, (ii) finance capitalized interest on the Bonds through approximately September 2, 2018, (iii) pay costs of issuance, (iv) redeem a portion of the Community Facilities District No of the City of Malibu (Malibu Civic Center Wastewater Treatment Plan Design Phase One) Special Tax Bonds, Series 2013 (the Prior Bonds ) on September 1, 2016, (v) pay for the formation costs of the Assessment District, (vi) pay a portion of the costs of the Improvements, and (vii) fund a debt service reserve fund for a proposed State Loan Agreement (as defined below). See ESTIMATED SOURCES AND USES OF FUNDS, REFUNDING PLAN and THE ASSESSMENT DISTRICT herein. The Bonds are being issued in fully registered book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ) in the denomination of $5,000 or any integral multiple thereof. Interest is payable on September 2, 2016, and semiannually thereafter on March 2 and September 2 of each year. Purchasers will not receive certificates representing their interest in the Bonds. Payments of principal and interest on the Bonds will be paid by the Fiscal Agent directly to the registered owner of the Bonds. Upon receipt of payments of principal and interest on Bonds registered to its nominee, DTC is to remit such principal and interest to DTC Participants (as defined herein) for subsequent disbursement to the beneficial owners of such Bonds. See APPENDIX E BOOK ENTRY ONLY SYSTEM. The Bonds are subject to redemption prior to maturity as described under THE BONDS Redemption of Bonds herein. Under the provisions of the Improvement Bond Act of 1915, installments of principal and interest sufficient to meet annual Bond debt service will be levied by the City and billed by the County of Los Angeles (the County ) to owners of property within the Assessment District against which there are unpaid assessments. The City expects to enter into an Installment Sale and Grant Agreement (the State Loan Agreement ) with the State Water Resources Control Board (the State Board ) in an amount which, together with the Bonds, will be sufficient to finance the completion of the Improvements. The Bonds and the State Loan Agreement will be secured by a pledge and lien on the assessments and moneys on deposit in the Assessment Fund on a parity with one another. In the event the City does not obtain financing from the State Board, it expects to issue Additional Bonds secured by the assessments on a parity with the Bonds to finance the Improvements. Upon receipt by the City from the County, these annual assessment installments are to be deposited into the Assessment Fund to be held by the City and used to pay debt service on the Bonds and the State Loan Agreement or Additional Bonds as they become due. Unpaid assessments constitute fixed liens on the lots and parcels assessed within the Assessment District and do not constitute a personal indebtedness of the respective owners of such lots and parcels. Accordingly, in the event of a delinquency, proceedings may be taken only against the real property securing the delinquent assessment. Thus, the value of land within the Assessment District is a critical factor in determining the investment quality of the Bonds. See THE ASSESSMENT DISTRICT Value-to-Assessment Lien Ratios and BONDOWNERS RISKS Land Values herein. The Fiscal Agent will establish a Reserve Fund and deposit therein Bond proceeds in the amount of the Reserve Requirement to provide funds for payment of principal and interest on the Bonds in the event of any delinquent assessment installments. The City s obligation to advance funds to the Redemption Fund as a result of delinquent installments is limited to the balance in the Reserve Fund. The Reserve Fund does not secure payments on the State Loan Agreement. The City will be required to fund a reserve fund pursuant to the State Loan Agreement and such reserve fund will not secure the payment of principal of and interest on the Bonds. The City has covenanted to initiate judicial foreclosure in the event of a delinquency as described herein. See SECURITY FOR THE BONDS Covenant to Foreclose and Court Foreclosure Proceedings. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY OF MALIBU, THE COUNTY OF LOS ANGELES, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE SOURCES DESCRIBED IN THE FISCAL AGENT AGREEMENT. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement, including, without limitation, Bondowners Risks, to obtain information essential to the making of an informed investment decision. The Bonds are offered when, as and if issued and delivered to the Underwriter subject to the approval of Stradling Yocca Carlson & Rauth, Newport Beach, California, Bond Counsel and Disclosure Counsel. Certain matters will be passed upon for the City by the City Attorney. Certain legal matters will be passed upon for the Underwriter by its counsel, Jones Hall, A Professional Law Corporation, San Francisco, California. It is anticipated that the Bonds will be available for delivery to The Depository Trust Company in New York, New York on or about May 10, Dated: May 3, 2016

2 $6,295,000 CITY OF MALIBU ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY PHASE I) TAXABLE LIMITED OBLIGATION IMPROVEMENT BONDS 2016 SERIES A BASE CUSIP : 56117F MATURITY SCHEDULE Maturity Date (September 2) Principal Amount Interest Rate Yield CUSIP 2019 $130, % 2.400% AA , AB , AC , AD , AE , AF , AG , AH , AJ , AK , AL , AM , AN8 $1,100, % Term Bonds due September 2, 2036 Yield: 4.820% CUSIP No. AP3 $1,410, % Term Bonds due September 2, 2041 Yield: 4.920% CUSIP No. AQ1 $1,770, % Term Bonds due September 2, 2046 Yield: 5.020% CUSIP No. AR9 Copyright 2016, American Bankers Association. CUSIP data in this Official Statement is provided by CUSIP Global Services, managed by S&P Capital IQ on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. The City and the Underwriter make no representations as to the accuracy of CUSIP data in this Official Statement.

3 CITY OF MALIBU COUNTY OF LOS ANGELES, CALIFORNIA CITY COUNCIL Laura Zahn Rosenthal, Mayor Lou La Monte, Mayor Pro Tem Joan House, Councilmember Skylar Peak, Councilmember John Sibert, Councilmember CITY OFFICIALS Reva Feldman, City Manager Christi Hogin, City Attorney Lisa Pope, City Clerk BOND COUNSEL AND DISCLOSURE COUNSEL Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California FISCAL AGENT U.S. Bank National Association Los Angeles, California ASSESSMENT ENGINEER David Taussig & Associates Newport Beach, California

4 No dealer, broker, salesperson or other person has been authorized by the City, the Fiscal Agent or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City, the Fiscal Agent or the Underwriter. This Official Statement 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 a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers or Owners of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. This Official Statement, including any supplement or amendment hereto, is intended to be deposited with a nationally recognized municipal securities depository. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information set forth herein which has been obtained by the City from third party sources is believed to be reliable but is not guaranteed as to accuracy or completeness by the City or the Fiscal Agent. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City, the landowners within the City or any other parties described herein since the date hereof. All summaries of the Fiscal Agent Agreement or other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith. While the City maintains an internet website for various purposes, none of the information on that website is incorporated by reference herein or intended to assist investors in making any investment decision or to provide any continuing information with respect to the Bonds or any other bonds or obligations of the City. Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as plan, expect, estimate, project, budget or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the caption THE ASSESSMENT DISTRICT. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

5 TABLE OF CONTENTS INTRODUCTION... 1 Purpose... 1 Forward Looking Statements... 1 The Assessment District... 2 Property Values and Value-to-Assessment Lien Ratios... 2 State Loan Agreement or Additional Bonds... 3 The Improvements... 3 Tax Matters... 3 Professionals Involved in the Offering... 3 Continuing Disclosure... 4 Bond Owners Risks... 4 Other Information... 4 FINANCING PLAN... 4 REFUNDING PLAN... 7 ESTIMATED SOURCES AND USES OF FUNDS... 7 THE BONDS... 8 General... 8 Redemption of Bonds... 8 Purchase of Bonds Notice of Redemption Selection of Bonds for Redemption Refunding Bonds Registration, Exchange or Transfer Annual Debt Service SECURITY FOR THE BONDS Limited Obligation Assessment Liens and Installments Limited Obligation Upon Delinquency Reserve Fund Covenant to Foreclose and Court Foreclosure Proceedings Priority of Assessment Lien Additional Bonds THE ASSESSMENT DISTRICT Description of the Assessment District Formation Proceedings Allocation of Assessments Maximum Annual Assessment for Administrative Costs and Expenses Value-to-Assessment Lien Ratios Largest Property Owners Direct and Overlapping Indebtedness BONDOWNERS RISKS General Measure R Risks of Real Estate Secured Investments Generally Limited Obligations Failure to Enter into State Loan Agreement MOU Related Property Owner Penalties Delinquency Resulting in Ultimate or Temporary Loss on Bonds Non-Cash Payments of Assessments Limited City Obligation Upon Delinquency Disclosures to Future Purchasers Payment of the Assessments is not a Personal Obligation of the Owners Development Uncertainties General Concentration of Ownership Land Values Bankruptcy and Foreclosure FDIC/Federal Government Interests in Parcels No Acceleration Provision Limitation on Remedies Natural Disasters Hazardous Substances Limited Secondary Market Future Debt Issuance Ballot Initiatives Constitutional Amendment Articles IIIC and IIID CONCLUDING INFORMATION Continuing Disclosure Legal Opinion Tax Matters Litigation Financial Interests No Rating Underwriting Miscellaneous APPENDIX A ASSESSMENT DIAGRAM... A-1 APPENDIX B ENGINEER S REPORT... B-1 APPENDIX C SUMMARY OF THE FISCAL AGENT AGREEMENT... C-1 APPENDIX D OPINION OF BOND COUNSEL... D-1 APPENDIX E BOOK-ENTRY ONLY SYSTEM... E-1 APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT... F-1 i

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7 $6,295,000 CITY OF MALIBU ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY PHASE I) TAXABLE LIMITED OBLIGATION IMPROVEMENT BONDS 2016 SERIES A INTRODUCTION Purpose The purpose of this Official Statement, which includes the cover page, the table of contents and the attached appendices (collectively, the Official Statement ), is to provide certain information concerning the issuance by the City of Malibu (the City ) of the $6,295,000 City of Malibu Assessment District No (Civic Center Wastewater Treatment Facility Phase I) Taxable Limited Obligation Improvement Bonds 2016 Series A (the Bonds ). The proceeds of the Bonds will be used to (i) fund the Reserve Fund for the Bonds, (ii) finance capitalized interest on the Bonds through approximately September 2, 2018, (iii) pay costs of issuance, (iv) redeem a portion of the Community Facilities District No of the City of Malibu (Malibu Civic Center Wastewater Treatment Plan Design Phase One) Special Tax Bonds, Series 2013 (the Prior Bonds ) on September 1, 2016, (v) pay for the formation costs of the Assessment District, (vi) pay for a portion of the Costs of the Improvements (as defined herein) and (vii) fund a debt service reserve fund for a proposed State Loan Agreement (as defined below). See ESTIMATED SOURCES AND USES OF FUNDS, REFUNDING PLAN and THE ASSESSMENT DISTRICT herein. The Bonds are to be issued pursuant to a Fiscal Agent Agreement by and between the City acting on behalf of the City of Malibu Assessment District No (Civic Center Wastewater Treatment Facility Phase I) (the Assessment District ) and U.S. Bank National Association (the Fiscal Agent ), dated as of May 1, 2016 (the Fiscal Agent Agreement ). The Bonds are secured under the Fiscal Agent Agreement by a pledge of and lien upon the Assessments (as defined therein) and all moneys on deposit in the Assessment Fund, the Redemption Fund and the Reserve Fund. The City expects to enter into an Installment Sale and Grant Agreement (the State Loan Agreement ) with the State Water Resources Control Board (the State Board ), to be executed and delivered following the issuance of the Bonds, will also be secured by the Assessments. The payments due on the Bonds and under the State Loan Agreement will be made on a parity basis. In the event the City does not obtain financing from the State Board, it expects to issue Additional Bonds secured by the Assessments on a parity with the Bonds to finance the Improvements, and construction of the wastewater treatment plant could face higher financing costs. See FINANCING PLAN. The principal amount of the State Loan Agreement plus the principal amount of the Bonds will not exceed the principal amount of the unpaid Assessments within the Assessment District ($58,548,025.13). See SECURITY FOR THE BONDS. This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by more complete and detailed information contained in, this entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement. The sale and delivery of Bonds to potential investors is made only by means of the entire Official Statement. All capitalized terms used in this Official Statement and not defined herein shall have the meanings set forth in APPENDIX C SUMMARY OF THE FISCAL AGENT AGREEMENT Definitions herein. Forward Looking Statements Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act 1

8 of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as a plan, expect, estimate, project, budget or similar words. Such forwardlooking statements include, but are not limited to certain statements contained in the information under the caption THE ASSESSMENT DISTRICT. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. The Assessment District The Assessment District is located in the eastern portion of the City adjacent to State Highway 1 in and around the Malibu Civic Center. There are 42 parcels in the Assessment District with unpaid assessments securing the Bonds. The property in the Assessment District is zoned residential and commercial and approximately 23 of the 42 parcels with unpaid Assessments have been developed. See THE ASSESSMENT DISTRICT herein. Assessment proceedings were initiated by the City Council of the City pursuant to the Municipal Improvement Act of 1913, Division 12 of the California Streets and Highways Code (the Act ) by adoption of Resolution No on June 8, 2015, declaring its intention to form the Assessment District. David Taussig & Associates, Newport Beach, (the Assessment Engineer ) prepared a written report which contained among other things, the proposed assessment for each parcel of land in the Assessment District. The written report was filed and preliminarily approved by the City Council by Resolution No , adopted on June 8, The written report was later modified (as modified, the Engineer s Report ). On January 25, 2016, a public hearing was duly held as noticed, and all persons interested and desiring to be heard were given an opportunity to speak and be heard, and all matters pertaining to the levy were fully heard and considered by the City Council, and all oral statements and all written protests or communications were duly considered. Following the public hearing, the assessment ballots were tabulated by the Assessment Engineer and the City Clerk and it was found that a majority protest as defined by Article XIIID of the California Constitution did not exist. On January 25, 2016, the City Council adopted its resolution confirming the proposed assessments. The City Council confirmed a total assessment of $63,688, and recorded such confirmed assessments. After confirmation and recordation, the assessments became liens against the various assessed parcels. All property owners in the Assessment District were then given mailed notice of the opportunity to pay all or a portion of their Assessments in cash within 30 days of the recording of the Assessments. Originally, there were 47 assessed parcels with Assessments totaling $63,688, The City and the County of Los Angeles prepaid the Assessments on property they own in the Assessment District in whole during the 30 day cash prepayment period. There remains $58,548, of unpaid Assessments securing the Bonds (the Assessments ). See SECURITY FOR THE BONDS. Property Values and Value-to-Assessment Lien Ratios The aggregate assessed value of the parcels in the City with unpaid Assessments, as shown in the County of Los Angeles assessor s roll for fiscal year , was $338,044,758. The ratio of the assessed value of such parcels to the total amount of the unpaid Assessments, is approximately 5.77 to 1. See THE ASSESSMENT DISTRICT Value-to-Lien Assessment Ratios for a listing of each parcel with unpaid Assessments and the assessed value of each parcel. 2

9 State Loan Agreement or Additional Bonds The City is authorized to enter into the State Loan Agreement and/or to issue additional bonds secured by the Assessments provided that the total principal amount of the Bonds and the State Loan Agreement and/or additional bonds shall not exceed the amount of the unpaid Assessments. The City expects to enter into the State Loan Agreement shortly after issuance of the Bonds. However, the City can make no assurance that the State Loan Agreement will be entered into or that if it is entered into that it will have the terms described herein. If the City is unable to obtain financing from the State Board it expects to issue additional bonds to finance the remaining costs of the design and construction of a wastewater treatment plant, wastewater collection and recycled water distribution system and recycled water injection system (the Improvements ), which additional bonds together with the Bonds would be in an amount not to exceed the unpaid Assessments. See SECURITY FOR THE BONDS Additional Bonds. Nothing in the Fiscal Agent Agreement shall prevent the City from issuing bonds secured by Assessments on a basis subordinate to the Bonds, any Additional Bonds and payments due under the State Loan Agreement. The Improvements The Improvements consist of the design and construction of a 500,000 gallon per day wastewater treatment plant, wastewater collection and recycled water distribution system, and a recycled water injection system required pursuant to a memorandum of understanding between the City and the State Board. The recycled water distribution and injection system is designed to dispose of treated wastewater. The treatment process will meet Title 22 requirements for non-potable use. The Improvements will bring wastewater collection and recycled water distribution pipelines to the property line of individual parcels. It is anticipated that the Improvements will generate 150,000 to 200,000 gallons of recycled water a year, thereby helping to reduce the reliance on potable water. See THE FINANCING PLAN and Appendix B ENGINEER S REPORT. Tax Matters In the opinion of Bond Counsel, under existing laws, regulations, rulings and court decisions, the interest (and original issue discount) on the Bonds is exempt from personal income taxes of the State of California but is not excludable from gross income of the owners of the Bonds for federal income tax purposes. Set forth in Appendix D is the opinion of Bond Counsel expected to be delivered in connection with the issuance of the Bonds. For a more complete discussion of such opinion and the tax consequences incident to the ownership of the Bonds, including certain exceptions to the tax treatment of interest, see CONCLUDING INFORMATION Tax Matters herein. Professionals Involved in the Offering U.S. Bank National Association, Los Angeles, California, will act as Fiscal Agent under the Fiscal Agent Agreement and as the initial Dissemination Agent under the City s Continuing Disclosure Agreement. The legal proceedings in connection with the issuance and delivery of the Bonds are subject to the approval as to their legality of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel and Disclosure Counsel. Certain legal matters will be passed on for the City by the City Attorney. Certain legal matters will be passed upon for the Underwriter by its counsel, Jones Hall, A Professional Law Corporation, San Francisco, California. Other professional services have been performed by David Taussig & Association, Newport Beach, California, as Assessment Engineer. For information concerning financial or other interest which certain of the above-mentioned professionals, advisors, counsel and agents may have in the offering of the Bonds, see CONCLUDING INFORMATION Financial Interests herein. 3

10 Continuing Disclosure The City has agreed to provide, or cause to be provided, to each nationally recognized municipal securities information repository and any public or private repository or entity designated by the State as a state repository for purposes of Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission, certain annual financial information and operating data. The City has further agreed to provide notice of certain enumerated events. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5). See CONCLUDING INFORMATION Continuing Disclosure herein and Appendix F hereto for a description of the specific nature of the annual reports and notices of enumerated events to be provided by the City. Bond Owners Risks Certain events could affect the timely repayment of the principal of and interest on the Bonds when due. See the section of this Official Statement entitled BONDOWNERS RISKS for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds. The purchase of the Bonds involves risks, and the Bonds are not suitable investments for some types of investors. See BONDOWNERS RISKS herein. Other Information This Official Statement speaks only as of its date, and the information contained herein is subject to change. Brief descriptions of the Bonds and the Fiscal Agent Agreement are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Fiscal Agent Agreement, the Bonds and the constitution and laws of the State as well as the proceedings of the City Council of the City, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the Bonds, by reference to the Fiscal Agent Agreement. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Fiscal Agent Agreement. Copies of the Fiscal Agent Agreement, the Continuing Disclosure Agreement and other documents and information referred to herein are available for inspection and (upon request and payment to the Fiscal Agent of a charge for copying, mailing and handling) for delivery from the Fiscal Agent. FINANCING PLAN The coastal waters of the Pacific Ocean near the Malibu Civic Center Area, as well as the waters of the nearby Malibu Lagoon and Malibu Creek, have historically tested poorly for water quality. The City, the Regional Water Quality Control Board-Los Angeles Region (the Regional Board ), various environmental groups and local property owners have disputed the source of the pollution. Most properties within the Malibu Civic Center Area have septic tanks and no centralized wastewater collection, treatment and disposal system currently exists for property within the Malibu Civic Center Area. The Regional Board believes that the septic tanks are the leading source of the poor water quality. In late 2009, the Regional Board approved an amendment to the Water Quality Control Plan for the Coastal Watersheds of Los Angeles and Ventura Counties (the Basin Plan ). In late 2010, the State Board approved the amendment to the Basin Plan. Notwithstanding the fact that the City disagrees with the Regional Board s conclusion that septic tanks have contributed to the poor water quality in the vicinity of the City, in late 2011, the City, the Regional Board and the State Board entered into a Memorandum of Understanding Regarding Phased Implementation of Basin Plan Amendment Prohibiting On-Site Wastewater Disposal Systems in the Malibu Civic Center Area, which memorandum was amended in December 2014 (as amended, the MOU ). The MOU will expire upon the completion of Phase III, as described below, or upon earlier 4

11 termination as agreed to by the City, the Regional Board and the State Board. The MOU tolls and extends the period during which the City is entitled to challenge the Basin Plan amendment until the expiration of the term of the MOU. The amendment to the Basin Plan: (i) prohibits new on-site wastewater disposal systems (septic tanks) in the Malibu Civic Center Area; (ii) prohibits discharges after June 2017 from existing septic tanks in certain areas identified in the MOU described below, which includes the entirety of the District and most of the commercial property within the Malibu Civic Center Area ( Phase I ); and (iii) prohibits discharges after November 2022 from existing septic tanks in certain residential areas ( Phase II ) in the vicinity of the Malibu Civic Center Area. Pursuant to the MOU, the City agreed, inter alia: (a) to complete and submit a certified environmental impact report for a wastewater treatment plant (the EIR ) by March 31, 2013; (b) to create an assessment district for all properties within Phase I by September 30, 2013; and (c) to design and construct a wastewater treatment plant by June 2017 to serve the Phase I property owners. The City will not meet the deadline of June 2017; however, the City is still working collaboratively with the State Board to construct the Improvements. The State Board has provided no assurances regarding extending these deadlines but has offered to provide financing in the form of grants and low interest loans towards the construction of the Improvements and to enter into the State Loan Agreement. The City is responsible for meeting all waste discharge requirements for the wastewater treatment plant. In addition, the wastewater treatment plant must treat all water to the requirements of applicable State and federal law and regulations, including the Clean Water Act, the Basin Plan, the Porter-Cologne Water Quality Control Act and the standards set forth in Division 4 of Title 22 of the California Code of Regulations. The MOU permits the City to consider deep well or groundwater injections without reverse osmosis as an effluent dispersal method. Under the MOU, all property owners within the Phase I area are required to connect to the wastewater treatment plant by June 2017, and all property owners within the Phase II area are required to connect to the wastewater treatment plant or an additional facility designed to the same standards by November If required, all property owners located in the Phase III area (as defined below) must connect to the wastewater treatment plant or an additional facility designed to the same standards by November Construction of the wastewater treatment plan will not be completed by June However, as discussed above, the City is working collaboratively with the State Board on completing the financing and construction of the Improvements. Within one year after the connection of Phase I property owners to the wastewater treatment plant, the City is to undertake a 12-month water quality sampling program in the Malibu Lagoon to determine whether a one log reduction in bacteria (reflecting a 10-fold reduction in the number of live bacteria) and a 50% reduction in nitrogen concentration has occurred. Within one year after the connection of Phase II property owners to the wastewater treatment plant or an additional facility, the City is to undertake a 12-month water quality sampling program in the Malibu Lagoon to determine whether a further one log reduction in bacteria and a further 50% reduction in nitrogen concentration has occurred. Based upon the results of such testing, additional properties in the City ( Phase III ) may be required to connect to the wastewater treatment plant or an additional facility by November 5, On August 13, 2012, the City formed the Community Facilities District No of the City of Malibu (Malibu Civic Center Wastewater Treatment Plan Design Phase One) (the CFD ), which included some but not all of the properties in the Assessment District, for the purpose of financing certain costs relating to the design of a wastewater treatment plant that was contemplated prior to the execution of the MOU. On February 8, 2013, the CFD issued the Prior Bonds for the purpose of financing these design costs. The Prior Bonds are expected to be redeemed from a portion of the Bond proceeds and proceeds of the State Loan Agreement or Additional Bonds. See PLAN OF REFUNDING herein. 5

12 The City expects to construct and operate the wastewater treatment plant and the other improvements and to establish rates and charges to fund the operation and maintenance thereof. The City completed the design for the Improvements in 2015 and certified the EIR in January On March 12, 2015, the State Board approved the waste discharge and water recycling requirements relating to the wastewater treatment plant and on May 13, 2015, the California Coastal Commission approved an amendment to the Local Implementation Plan of the Local Coastal Plan to allow for the development of the wastewater treatment plant with certain modifications. The City Council approved the proposed modifications on June and the California Coastal Commission certified the Local Implementation Plan on August 12, The City has all the approvals required to proceed with construction of the Improvements. In December, 2015, the City opened construction bids for the Improvements. The estimated costs (including all design and construction costs) is $52,776,366. The Assessment District has been formed for the purpose of satisfying the Phase I requirements under the MOU and includes all of the property owners required to be included in Phase I under the MOU. The City expects the State Board through the State Loan Agreement to provide funding in the amount of approximately $60,300,000, which consists of approximately $24,500,000 of a 1.00% loan, approximately $26,000,000 of a 1.70% loan and approximately $9,500,000 in grants. Payments under the State Loan Agreement will be secured by the unpaid Assessments on a parity basis with the payment of principal of and interest on the Bonds. The City expects the State Loan Agreement to close in May If the City is unable to obtain financing from the State Board, it expects to issue Additional Bonds secured by the unpaid Assessments on a parity basis with the Bonds as soon as possible which could result in an increase in financing costs. The City expects to award the construction contracts as soon as possible following the closing of the State Loan Agreement. Construction of the Improvements is expected to take approximately 18 months. The amount of grant moneys expected to be received from the State Board is significantly higher than the approximately $2,000,000 assumed in the Engineer s Report upon which the Assessments were conformed. Accordingly, following completion of the Improvements, the City expects to undertake proceedings to reduce the amount of the Assessments to equal the outstanding principal amount of the Bonds and any Additional Bonds, and the balance of the State Loan Agreement. If the wastewater treatment plant is not constructed, monetary fines could be imposed upon the City or the City could become subject to court orders compelling it to take or refrain from certain actions based on the restrictions set forth in the Basin Plan and the MOU. In addition, Phase I property owners could face similar penalties for discharges from septic tanks. The imposition of fines or restraining orders against Phase I property owners could affect their ability to develop or continue operating their properties as currently contemplated, which could impact the value of the property within the Assessment District and the property owners ability or willingness to pay the Assessments. See the caption SPECIAL RISK FACTORS Development Restrictions Imposed by the MOU. 6

13 REFUNDING PLAN Refunded Bonds. The Prior Bonds, which are currently outstanding in the aggregate principal amount of $6,500,000, were executed and delivered under a Bond Indenture, dated as of February 1, 2013 (the 2013 Bond Indenture ), by and between the Community Facilities District No of the City of Malibu (Malibu Civic Center Wastewater Treatment Plan Design Phase One) (the Community Facilities District ) and U.S. Bank National Association, as trustee (the 2013 Trustee ). The District plans to apply a portion of the proceeds of the Bonds together with proceeds from the State Loan Agreement or Additional Bonds, along with funds held under the 2013 Bond Indenture, to pay the principal of and interest on the Prior Bonds through September 1, 2016 and to refund the Prior Bonds on September 1, 2016 at a redemption price equal to 102% of the principal amount of the Prior Bonds to be redeemed, plus accrued interest with respect thereto to the date of redemption (collectively, the Redemption Price ). Should the State Loan Agreement not be entered into or additional bonds not be issued, only a portion of the Prior Bonds in the amount of $1,170,000 shall be redeemed on September 1, 2016 from proceeds of the Bonds. Upon issuance of the Bonds, a portion of the Bond proceeds will be deposited with the 2013 Trustee. The Community Facilities District will deliver irrevocable instructions to the 2013 Trustee for the purposes of redeeming the Prior Bonds being refunded by Bond proceeds on September 1, 2016 and paying the Redemption Price on such Bonds on such date (the Irrevocable Instructions ). The foregoing amounts held by the 2013 Trustee are pledged solely to the payment of the Prior Bonds. Such funds will not be available for the payments with respect to the Bonds. ESTIMATED SOURCES AND USES OF FUNDS The Fiscal Agent will receive the proceeds from the sale of the Bonds upon delivery of such Bonds to the purchasers thereof. The proceeds of the Bonds will be applied as set forth in the following table: SOURCES: Par Amount of Bonds $ 6,295, Less Original Issue Discount (68,328.05) Plus Funds held by 2013 Trustee 73, Less Underwriter s Discount (103,950.00) Total Sources $ 6,195, USES: Improvement Fund (1) $ 3,323, Costs of Issuance Fund (2) 588, Redemption of Prior Bonds 1,216, Interest Account (3) 654, Reserve Fund 413, Total Uses $ 6,195, (1) (2) (3) Includes amounts to be used to fund the reserve fund for the State Loan Agreement, fund the payment of interest and principal due on the Prior Bonds through September 1, 2016 and to redeem a portion of the Prior Bonds on September 1, 2016 (including redemption premium). Remaining funds may also be used to fund the Improvements or to redeem additional Prior Bonds. Includes costs of issuance, such as Fiscal Agent, Bond Counsel and Disclosure Counsel fees and costs, printing costs and other related costs for the issuance of Bonds, reimbursable expenses of the City, certain upfront design and engineering costs and the costs of the formation of the Assessment District. To fund interest on the Bonds through approximately September 2, 2018 if the State Loan Agreement is entered into. If the State Loan Agreement is not entered into, the City expects to transfer a portion of such moneys to the Improvement Fund and to levy Assessments earlier than currently projected. 7

14 THE BONDS General The $6,295,000 aggregate principal amount of the Bonds was authorized for issuance by a resolution adopted by the City Council of the City and are being issued by the City pursuant to the Act and the Fiscal Agent Agreement between the City and the Fiscal Agent. The Bonds will be dated their date of delivery and mature on September 2 in the years and in the amounts shown on the cover page of this Official Statement. Interest shall be payable on September 2, 2016, and semiannually thereafter on March 2 and September 2 of each year until maturity. The Bonds are issued as fully registered bonds, with authorized denominations of $5,000 and any increment of $5,000 in excess thereof. The payment of principal of, including mandatory sinking fund payments, and interest on the Bonds will be made on a pro rata basis with payments due under the State Loan Agreement. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated after a Record Date and on or before the immediately succeeding Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated before the close of business on the first Record Date, in which event it shall bear interest from its dated date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon or from the date of original delivery of the Bonds, if no interest has previously been paid or made available for payment on the Outstanding Bonds. Interest on the Bonds is payable by the Fiscal Agent on each Interest Payment Date, until the principal amount of a Bond including mandatory sinking fund payments thereon, has been paid or made available for payment, to the registered Owner thereof at such registered Owner s address as it appears on the registration books maintained by the Fiscal Agent at the close of the Business Day on the Record Date preceding the Interest Payment Date. The Bonds will be held in book-entry form and registered in the name of Cede & Co., as nominee of The Depository Trust Company ( DTC ), all interest payments will be made directly to DTC for distribution to the beneficial owners in accordance with DTC s procedures. See APPENDIX E BOOK- ENTRY ONLY SYSTEM herein. Redemption of Bonds Optional Redemption. The Bonds are subject to redemption prior to their stated maturity dates on any Interest Payment Date from such maturities as selected by the City, from any source of funds other than Prepayment of Assessments, including, but not limited surplus monies on deposit in the Improvement Fund, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption at the following redemption prices: Redemption Date Redemption Prices September 2, 2020 through March 2, % September 2, 2024 and March 2, September 2, 2025 and March 2, September 2, 2026 and thereafter 100 Mandatory Redemption From Assessment Prepayments. Whenever, as of an Interest Payment Date, there are sufficient funds in the Prepayment Account of the Redemption Fund from the proceeds of prepayments of Assessments, the Bonds shall be called for redemption as provided in Part 11.1 of the 1915 Act. Each Bond, or any portion thereof, in the principal amount of $5,000 or any integral multiple thereof, may be redeemed and paid in advance of maturity on any Interest Payment Date in any year pro rata among maturities, by giving notice to the Owner thereof and by paying the principal amount thereof, plus interest to 8

15 the date of redemption, unless sooner surrendered, in which event said interest will be paid to the date of payment, together with a redemption premium (expressed as percentages of the principal amount of the Bonds to be redeemed) at the following redemption prices: Redemption Date Redemption Prices Interest Payment Dates on or prior to March 2, % September 2, 2024 and March 2, September 2, 2025 and March 2, September 2, 2026 and thereafter 100 In the event the City enters into the State Loan Agreement, it expects any Assessment prepayments to be applied: (i) to redeem the Bonds and any Additional Bonds and prepay the State Loan Agreement on a pro rata basis until construction of the Improvements has been completed, and (ii) after completion of the Improvements, first to redeem the Bonds and any Additional Bonds on a pro rata basis and then to prepay the State Loan Agreement. Mandatory Sinking Fund Redemption. The outstanding Bonds maturing on September 2, 2036 are subject to mandatory sinking fund redemption, in part, on September 2, 2032 and on each September 2 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, and from sinking payments as follows: Sinking Fund Redemption Date (September 2) Bonds Maturing on September 2, 2036 Sinking Payments 2032 $200, , , , (Maturity) 240,000 The outstanding Bonds maturing on September 2, 2041 are subject to mandatory sinking fund redemption, in part, on September 2, 2037 and on each September 2 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, and from sinking payments as follows: Sinking Fund Redemption Date (September 2) Bonds Maturing on September 2, 2041 Sinking Payments 2037 $255, , , , (Maturity) 310,000 The outstanding Bonds maturing on September 2, 2046 are subject to mandatory sinking fund redemption, in part, on September 2, 2042 and on each September 2 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, and from sinking payments as follows: 9

16 Sinking Fund Redemption Date (September 2) Bonds Maturing on September 2, 2046 Sinking Payments 2042 $320, , , , (Maturity) 390,000 The amounts in the foregoing schedules shall be reduced by the City pro rata among redemption dates, in order to maintain substantially level debt service on the Bonds, as a result of any prior or partial optional or other mandatory redemption of the Bonds. Purchase of Bonds In lieu of payment at maturity or redemption, moneys in the Redemption Fund may be used and withdrawn by the Fiscal Agent for purchase of outstanding Bonds, upon the filing with the Fiscal Agent of an Officer s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer s Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus the premium, if any, which would be paid upon redemption, plus interest accrued to the date of purchase. Notice of Redemption With respect to the Bonds held in book-entry form, notices of redemption will be mailed only to The Depository Trust Company and not to any beneficial owner of the Bonds. The Fiscal Agent shall cause notice of any redemption to be mailed by registered or certified mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the securities depository and to certain information services, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books maintained by the Fiscal Agent; but the actual receipt of any notice shall not be a condition precedent to such redemption and failure to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds, or the cessation of interest on the redemption date. A notice of redemption for optional redemption may be conditioned on the receipt by the City of sufficient funds to effect the redemption. If sufficient funds are not received by the City by the redemption date, the redemption shall not occur and the Bonds will remain outstanding under the Fiscal Agent Agreement. If any redemption is cancelled due to lack of sufficient funds, the Fiscal Agent shall mail a notice to the Bondowners stating that such redemption was cancelled and did not occur. Selection of Bonds for Redemption Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the Bonds, the City shall select the Bonds for redemption in such a way that the ratio of Outstanding Bonds to issued Bonds shall be approximately the same in each maturity of the Bonds insofar as possible. The Fiscal Agent shall select the particular Bonds to be redeemed from each maturity by lot. Refunding Bonds Pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds (Division 11.5 of the Streets and Highways Code) (the 1984 Act ), the City may issue refunding bonds for the purpose of redeeming the 10

17 Bonds. The City may issue and sell refunding bonds without giving notice to and conducting a hearing for the owners of property in the Assessment District or giving notice to the owners of the Bonds if the City Council makes the findings required in the 1984 Act. The City may also issue additional bonds for non-refunding purposes if it is unable to enter into the State Loan Agreement or otherwise obtain financing from the State Board in an amount sufficient, along with the proceeds of the Bonds, to construct the Improvements. See SECURITY FOR THE BONDS Additional Bonds. Registration, Exchange or Transfer The registration of any Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellation at the office of the Fiscal Agent, accompanied by delivery of a written instrument of transfer in a form acceptable to the Fiscal Agent and duly executed by the Bondowner or his or her duly authorized attorney. Bonds may be exchanged at the office of the Fiscal Agent for a like aggregate principal amount of Bonds of other authorized denominations of the same maturity. The Fiscal Agent will not charge the Owner for any new Bond issued upon any exchange or transfer, but shall require the Owner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. The cost of printing any Bonds and any services rendered or any expenses incurred by the Fiscal Agent in connection with any exchange or transfer shall be paid by the City as Administrative Expenses. Whenever any Bond or Bonds shall be surrendered for registration of transfer or exchange, the City shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond or Bonds of the same maturity for a like aggregate principal amount; provided, that the Fiscal Agent shall not be required to register transfers or make exchanges of Bonds (a) 15 days prior to the date established by the Fiscal Agent for selection of Bonds for redemption, or (b) with respect to a Bond after such Bond has been selected for redemption. 11

18 Annual Debt Service Table 1 below sets forth the annual debt service on the Bonds based on the maturity schedule and interest rates set forth on the cover page of this Official Statement. (1) TABLE 1 CITY OF MALIBU ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY PHASE I) TAXABLE LIMITED OBLIGATION IMPROVEMENT BONDS 2016 SERIES A Annual Debt Service Year Ending September 2 Principal Interest Total 2016 $ -- $ 88, (1) $ 88, (1) , (1) 282, (1) , (1) 282, (1) , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Total $ 6,295, $ 5,828, $ 12,123, Estimated to be paid from capitalized interest if the State Loan Agreement is entered into. If the State Loan Agreement is not entered into, the City expects to transfer a portion of such moneys to the Improvement Fund and to levy Assessments earlier than currently projected. Source: Underwriter. 12

19 SECURITY FOR THE BONDS Limited Obligation The obligation of the City relating to the Bonds is not a general obligation of the City, but is a limited obligation, payable solely from the Assessments, on a pro rata basis with the State Loan Agreement or any Additional Bonds, and from the funds pledged therefor under the Fiscal Agent Agreement. Neither the faith and credit nor the taxing power of the City, the County or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds. Notwithstanding any other provision of the Fiscal Agent Agreement, the City is not obligated to advance available surplus funds from the City treasury to cure any deficiency in the Redemption Fund. Assessment Liens and Installments The Bonds are issued upon and secured by and payable solely from the unpaid Assessments on parcels of property within the Assessment District together with interest thereon, and such unpaid Assessments, together with interest thereon, constitute a fund for the redemption and payment of the principal, including mandatory sinking fund payments, of the Bonds and the interest thereon and premium, if any. Amounts due under the State Loan Agreement are equally secured by and payable solely from the unpaid Assessments, so payments due on the Bonds and under the State Loan Agreement will be made on a pro rata basis. In addition, all of the Bonds are secured by the moneys in the Assessment Fund, the Redemption Fund and the Reserve Fund created pursuant to the Fiscal Agent Agreement. Amounts in the Reserve Fund will only secure the payment of debt service on the Bonds and any Additional Bonds and are not pledged to any payments due under the State Loan Agreement. If the City obtains financing from the State Board, the City expects to fund a separate reserve fund under the State Loan Agreement to secure payments due thereunder and such amounts will not be available to pay debt service on the Bonds. THE BONDS ARE NOT SECURED BY THE GENERAL TAXING POWER OF THE CITY, THE COUNTY OF LOS ANGELES OR THE STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS, NOR IS THE FULL FAITH AND CREDIT OF THE CITY, THE COUNTY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS PLEDGED TO THE PAYMENT OF THE BONDS. Although the unpaid Assessments constitute fixed liens on the lots and parcels assessed, they do not constitute a personal indebtedness of the respective owners of such lots and parcels. There can be no assurance as to the ability or the willingness of such owners to pay the unpaid Assessments when due. See BONDOWNERS RISKS herein. The unpaid Assessments will be collected in annual installments, together with interest, on the County secured tax roll on which general taxes on real property are collected (the Assessment Installments ). The City will include in the annual installments an amount for the payment of administrative expenses in the amount set forth in the Engineer s Report; such amounts are not available to pay debt service on the Bonds or Additional Bonds or payments due under the State Loan Agreement. The Assessment Installments are payable and become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do general taxes. The properties upon which the Assessments are levied are subject to the same provisions for sale and redemption as are properties for nonpayment of general taxes. The City shall immediately deposit the annual Assessment Installments into the Assessment Fund held by the City upon receipt from the County. Amounts in the Assessment Fund shall secure the payment of debt service on the Bonds and Additional Bonds and all payments due under the State Loan Agreement on a parity basis. In furtherance of the foregoing sentence, on or prior to the first day of March and September of each year, the City shall transfer to the Fiscal Agent for deposit into the Redemption Fund and the Reserve Fund the amount required in the Fiscal Agent Agreement, and on a parity basis, without preference or priority, transfer to the State Board amounts necessary to pay the principal and interest due on 13

20 the State Loan Agreement for the succeeding interest payment due thereunder, including any amounts necessary to restore the reserve fund established under the State Loan Agreement. The Assessment Installments billed against each of the lots and parcels in the Assessment District each year represent a pro rata share of the total principal, including mandatory sinking fund payments, and interest coming due on all of the Bonds that year and all amounts due under the State Loan Agreement in that year, including any amounts needed to replenish any reserve fund held thereunder. The amount billed against each lot or parcel is based on the percentage which the unpaid Assessment against the property bears to the total of unpaid Assessments in the Assessment District. The failure of a property owner to pay an annual Assessment Installment will not result in an increase in Assessment Installments against other property in the Assessment District. Each property owner has a statutory right to prepay the Assessment on a parcel in whole or in part on any date. Amounts received as prepaid Assessments will be deposited in the Prepayment Account of the Redemption Fund and shall be used solely for the purpose of redeeming Bonds or Additional Bonds or prepaying the State Loan Agreement. See THE BONDS Redemption of Bonds Mandatory Redemption from Assessment Prepayments. Limited Obligation Upon Delinquency THE BONDS ARE LIMITED OBLIGATIONS OF THE CITY AND ARE PAYABLE SOLELY FROM THE ASSESSMENTS AND THE ASSETS PLEDGED THEREFOR UNDER THE FISCAL AGENT AGREEMENT. THE CITY HAS DETERMINED NOT TO OBLIGATE ITSELF AND HAS NO LEGAL OR MORAL OBLIGATION TO ADVANCE AVAILABLE FUNDS FROM THE CITY TREASURY TO PAY BOND DEBT SERVICE IN THE EVENT OF DELINQUENT ASSESSMENT INSTALLMENTS. BONDOWNERS SHOULD NOT RELY UPON THE CITY TO ADVANCE AVAILABLE FUNDS FROM THE CITY TREASURY TO THE REDEMPTION FUND. NOTWITHSTANDING THE FOREGOING, THE CITY MAY, AT ITS SOLE OPTION AND IN ITS SOLE DISCRETION, ELECT TO ADVANCE SUCH FUNDS. Reserve Fund The Fiscal Agent Agreement provides that a Reserve Fund must be maintained. As established by the Fiscal Agent Agreement, the Reserve Fund is to be held by the Fiscal Agent. The amount to be maintained in the Reserve Fund is to equal the Reserve Requirement. The Reserve Requirement means, on each September 2nd (the calculation date), the least of (i) 10% of the net proceeds derived from the sale of the Bonds and any Additional Bonds (as hereinafter defined), (ii) maximum annual debt service on the Outstanding Bonds and any Additional Bonds, or (iii) 125% of average annual debt service on the Outstanding Bonds and any Additional Bonds. Moneys in the Reserve Fund shall be held for the benefit of the Owners of the Bonds and Additional Bonds as a reserve for the payment of the principal of, including mandatory sinking fund payments, and interest on the Bonds and Additional Bonds and shall be subject to a lien in favor of the Owners of the Bonds and Additional Bonds. See APPENDIX C SUMMARY OF FISCAL AGENT AGREEMENT. In the event an Assessment is prepaid, in whole or in part, the City shall transfer such payment to the Fiscal Agent for the prepayment of Bonds or Additional Bonds or to the State Board to prepay a portion of the State Loan Agreement. For Bond and Additional Bond prepayments, the amount of each Assessment prepaid shall be reduced by the amount the Fiscal Agent is required to transfer from the Reserve Fund for deposit in the Prepayment Account of the Redemption Fund. Under the Fiscal Agent Agreement the Fiscal Agent is to transfer the portion of the balance then in the Reserve Fund equal to the proportion that the Assessment prepaid bears to the total of all Assessments remaining unpaid as of such date. The City shall notify, or shall cause the Fiscal 14

21 Agent to be notified of the amount so transferred. After each such transfer, the Reserve Requirement shall be reduced by the amount of the related transfer. Whenever there are insufficient funds in the Redemption Fund to meet the next maturing installment of principal of, including mandatory sinking fund payments, or interest on the Bonds and Additional Bonds, the Fiscal Agent shall transfer from the Reserve Fund or deposit in the Redemption Fund an amount necessary to satisfy such deficiency. The City agrees in the Fiscal Agent Agreement that if such insufficiency was caused by delinquent payment of Assessment Installments, then an amount equal to the amount so transferred shall be reimbursed and transferred by the City to the Fiscal Agent, on a pro rata basis with any amount required to be transferred to the State Loan Agreement to replenish any reserve fund held thereunder, for deposit in the Reserve Fund from the proceeds of redemption or sale of the delinquent parcel. If at any time the amount of interest earned by the investment of any portion of the Reserve Fund, together with the principal amount in the Reserve Fund, shall exceed the Reserve Requirement, such excess shall, at the written direction of the City, be transferred by the Fiscal Agent to the Redemption Fund and shall be credited by the City upon the unpaid Assessments in the manner set for the in the 1913 Act. Whenever the balance in the Reserve Fund and the Redemption Fund is sufficient to retire all the remaining outstanding Bonds and Additional Bonds, the Fiscal Agent shall transfer at the written direction of the City the balance in the Reserve Fund to the Redemption Fund and the City shall cease the collection of the principal and interest on the unpaid Assessments. In such case, the City shall credit the balance so transferred against the Assessments remaining unpaid in the manner set forth in the 1915 Act. THE CITY HAS NO OBLIGATION TO REPLENISH THE RESERVE FUND EXCEPT TO THE EXTENT THAT DELINQUENT ASSESSMENT INSTALLMENTS ARE PAID OR PROCEEDS FROM FORECLOSURE SALES ARE REALIZED. Covenant to Foreclose and Court Foreclosure Proceedings The 1913 Act provides that in the event any Assessment or installment thereof or any interest thereon is not paid when due, the City may order the institution of a court action to foreclose the lien of the unpaid Assessment. In such an action, the real property subject to the unpaid Assessment may be sold at judicial foreclosure sale. This foreclosure sale procedure is not mandatory. However, pursuant to the Fiscal Agent Agreement, if the City determines that any single parcel subject to the Assessments is delinquent in the payment of an Assessment Installment, then the City shall, within 60 days of such determination, send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the owner of each parcel delinquent in the payment of said Assessment Installment, and (if the delinquency remains incurred) shall commence foreclosure proceedings within 180 days of such determination against each parcel delinquent. The 1913 Act provides that the court in a foreclosure proceeding has the power to order property securing delinquent Assessment Installments to be sold for an amount not less than all Assessment Installments, interest, penalties, costs, fees and other charges that are delinquent at the time the foreclosure action is ordered and certain other fees and amounts as provided in the 1913 Act. The court may also include subsequent delinquent Assessment Installments and all other delinquent amounts. If the property to be sold fails to sell for the minimum price described above, the City may petition the court to modify the judgment so that the property may be sold at a lesser price or without a minimum price. In certain circumstances, the court may modify the judgment after a hearing if the court makes certain determinations, including, but not limited to, a determination that the sale at less than the minimum price will not result in an ultimate loss to the Owners of the Bonds or the State Board, or a determination that the Owners of at least 75% of the principal amount of the Bonds outstanding and the State Board have consented to the petition and the sale will not result in an ultimate loss to the nonconsenting Bond Owners or the State Board. Neither the property owner, nor any holder of a security interest in the property, nor any defendant in the 15

22 foreclosure action, nor any agent thereof may purchase the property at the foreclosure sale for less than the minimum price. For any lot or parcel with not more than 4 dwelling units, a period of 140 days must elapse after the date of the notice of levy of the interest in real property is served on the judgment debtor before the sale of such lot or parcel can be made. However, pursuant to Streets and Highways Code Section 8832, the 140 day period may be shortened to 20 days for undeveloped property. If the judgment debtor fails to redeem, and if the purchaser at the sale is the judgment creditor (e.g., the City), an action may be commenced by the delinquent property owner within 90 days after the date of sale to set aside such sale. In the event court foreclosure proceedings are commenced by the City, there may be delays in payments to Owners of the Bonds pending prosecution of the foreclosure proceedings to completion, including the receipt of the City of the proceeds of the foreclosure sale. It is also possible that no qualified bid will be received at the foreclosure sale. See BONDOWNERS RISKS herein. Priority of Assessment Lien The Assessments (and any further assessment or reassessment) and each installment thereof and any interest and penalties thereon constitute a lien against the lots and parcels of land on which they were imposed until paid. Such lien has priority over all fixed special assessment liens which may thereafter be created against the property, and also has priority over all private liens, including the lien of any mortgage or deed of trust whenever created. Such lien is co-equal to and independent of the lien for general taxes. See THE ASSESSMENT DISTRICT Direct and Overlapping Indebtedness and BONDOWNERS RISKS FDIC/Federal Government Interests in Parcels. Additional Bonds The City is authorized to enter into the State Loan Agreement or to issue additional bonds (the Additional Bonds ) secured by the Assessments on a parity with the Bonds. See THE BONDS Refunding Bonds above. The City currently expects to enter into the State Loan Agreement in May 2016, although it is still negotiating final terms with the State Board. If the City is unable to enter into the State Loan Agreement or otherwise obtain financing from the State Board in an amount sufficient, along with the proceeds of the Bonds, to construct the Improvements, the City is authorized to issue Additional Bonds for the purpose of financing the Improvements, subject to the following preconditions: (i) The City shall be in compliance with all covenants set forth in the Fiscal Agent Agreement and any Supplemental Fiscal Agent Agreement then in effect and a certificate of the City to that effect shall have been filed with the Fiscal Agent; (ii) The City shall deliver a certificate to the Fiscal Agent certifying that the aggregate principal amount of the Bonds and any Additional Bonds to be Outstanding under the Fiscal Agent Agreement and any Supplemental Fiscal Agent Agreements, plus the principal balance remaining under the State Loan Agreement, will not exceed the amount of Assessments then unpaid; (iii) The issuance of such Additional Bonds shall have been duly authorized pursuant to the 1913 Act, the 1915 Act and all other applicable laws, and the issuance of such Additional Bonds shall have been provided for by a Supplemental Fiscal Agent Agreement duly adopted by the City which shall specify the following: (a) the purpose for which such Additional Bonds are to be issued and the fund or funds into which the proceeds thereof are to be deposited, (b) the authorized principal amount of such Additional Bonds, (c) the date and the maturity date or dates of such Additional Bonds; provided that (i) each maturity date shall fall on a September 2, (ii) all such Additional Bonds of like maturity shall be identical in all respects, except as to number, and (iii) fixed serial maturities shall be established to provide for the retirement of all such Additional Bonds on or before their respective maturity dates, (d) the description of the Additional Bonds, the place of 16

23 payment thereof and the procedure for execution and authentication, (e) the denominations and method of numbering of such Additional Bonds, (f) the amount and due date of each mandatory sinking fund payment due on term bonds, if any, for such Additional Bonds, (g) the amount, if any, to be deposited from the proceeds of such Additional Bonds in the Reserve Fund to increase the amount therein to the Reserve Requirement, (h) the form of such Additional Bonds, and (i) such other provisions as are necessary or appropriate and not inconsistent with the Fiscal Agent Agreement. Notwithstanding the foregoing, nothing in the Fiscal Agent Agreement shall prevent the City from issuing bonds secured by the Assessments on a basis subordinate to the Bonds and any Additional Bonds or the State Loan Agreement. Description of the Assessment District THE ASSESSMENT DISTRICT The property in the Assessment District is zoned residential and commercial and consists of a variety of vacant property and completed structures. The Assessment District consists of 42 assessed parcels which did not prepay their Assessments during the cash payment period. The City and the County of Los Angeles collectively prepaid the Assessments on the 5 lots they owned in whole in the amount of $4,641,807 during the 30 day cash collection period. The Assessment District is located in the eastern portion of the City adjacent to State Highway 1 in and around the Malibu Civic Center. The aggregate assessed value of parcels in the Assessment District with unpaid Assessments was $338,044,758 for Fiscal Year The Improvements financed by the Assessment District will consist of the design and construction of a wastewater treatment plant, wastewater collection and recycled water distribution system and recycled water injection system. As discussed above, the Improvements are expected to be funded by Bond proceeds and amounts received under the State Loan Agreement. Costs of the Improvements is estimated to be $52,776,366. Each of the property owners will be responsible for connecting laterals on their property to the Improvements and for removal of existing septic systems. See ESTIMATED SOURCES AND USES OF FUNDS. Any surplus monies on deposit in the Improvement Fund may be used to redeem Bonds. See THE BONDS Redemption of Bonds. Formation Proceedings The City Council has taken proceedings under the 1913 Act for the formation of the Assessment District and has confirmed the Assessments, which Assessments and a related diagram were recorded in the office of the Superintendent of Streets, and with the County Recorder of the County. A notice of assessment, as prescribed in Section 3114 of the Streets and Highways Code, was recorded with the County Recorder of the County, whereupon the Assessments attached as a lien upon the property assessed within the Assessment District as provided in Section 3115 of the Streets and Highways Code. On January 25, 2016, the City Council conducted a duly noticed public hearing regarding the formation of the Assessment District. As of the close of the public hearing, there was no majority protest. Property owners were then given an opportunity to prepay their assessments in cash or to pay them in annual installments following the issuance of the Bonds. At the end of the 30-day cash collection period, a list of unpaid assessments was filed with the Administrative Services Director/Assistant City Manager of the City, acting as treasurer pursuant to Section 8620 of the 1915 Act totaling $58,548, Allocation of Assessments The Assessment District was formed under the authority of the Act and Article XIIID of the California State Constitution, together with its implementing legislation (collectively Proposition 218 ), which require that local agencies levy assessments according to the special benefit and prescribe the procedures for such levy. Costs and expenses of the proposed Improvements must be apportioned against the parcels in the Assessment District by a formula which proportionally and equitably distributes the costs in direct proportion 17

24 to the estimated special benefits these parcels receive from the Improvements. Neither the Act or Proposition 218 specify the method that is used to apportion the benefits. In the Engineer s Report, the engineer identified the benefits the proposed Improvements will render to the properties within the Assessment District and determined that the property owners will receive a unique and special benefit distinguished from general benefits to the area at large. The unique and special benefit from the Improvements identified in the Engineer s Report is the ability to discharge wastewater flows to a centralized wastewater treatment facility in compliance with the MOU. See APPENDIX B ENGINEER S REPORT herein for a description of the method of apportionment of the assessments. Assessments range from a high of $14,886, to a low of $8, depending on the special benefit each property will receive from the Improvements as set forth in the Engineer s Report confirmed by the City Council. If the City enters into the State Loan Agreement, it expects to receive approximately $9 million in grant moneys from the State Board. Accordingly, if such grant moneys are received, the maximum amount of the Assessments would likely not be required to finance the construction of the Improvements. Upon completion of the Improvements and in the event that the City does not require the entire amount of the Assessments to finance the construction of the Improvements, the City expects to follow procedures to reduce the Assessments to that amount which is necessary to finance all Improvement costs and expenses. Maximum Annual Assessment for Administrative Costs and Expenses The costs associated with administering the Assessment District will be spread to each parcel in the Assessment District with unpaid Assessments on a pro-rata basis. Administrative costs for the Assessment District cannot exceed a total of $25,000 which may increase annually at a compound rate beginning January 1, 2016 by the lesser of (i) five percent (5%), or (ii) the annualized positive change, if any, in the U.S. Consumer Price Index, All Urban Consumers, for Los Angeles-Riverside-Orange County, as of January 1 of each year. Value-to-Assessment Lien Ratios The value of the land within the Assessment District with unpaid Assessments is significant because in the event of a delinquency in the payment of Assessment Installments, the Assessment District may foreclose only against delinquent parcels. The assessed value of the property within the Assessment District with unpaid Assessments was $338,044,758 for fiscal year Based on fiscal year assessed values, the Assessment District has an assessed value-to-assessment lien ratio of 5.77 to 1. Table 2 below sets forth a listing of each parcel with unpaid Assessments and the assessed value, unpaid Assessments and value-to-lien of each parcel: 18

25 TABLE 2 CITY OF MALIBU ASSESSMENT DISTRICT NO VALUE-TO-ASSESSMENT LIEN RATIOS BY PARCEL Assessment Number Parcel Owner Property Address Parcel Description Fiscal Year Assessed Value Confirmed AD No Assessment Valueto-Lien Percent Share of Assessment KW Malibu Colony LLC (2) Malibu Colony Plaza Shopping Malibu Road 30 Center $ 69,361,268 $ 14,886, % 44 Malibu Bay Company (3) Civic Center Way Vacant - Commercial 7,807,246 5,249, Malibu La Paz Ranch LLC N/A Vacant Commercial 3,261,075 3,969, Wave Property Inc Civic Center Way Vacant Residential 14,000,000 3,576, Surfrider Partners LLC Stuart Ranch Rd Commercial 12,780,978 2,846, Hitoshi Yamaguchi Tr Et Al, Tosh Trust, Eiko Mori Tr, And H And E Mori Trust Stuart Ranch Rd Vacant - Commercial 432,448 2,716, Cross Creek LLC (4) 3835 Cross Creek Rd Malibu Country Mart I Shopping Center 12,711,812 2,529, DB Malibu Holdco LLC N/A Vacant - Commercial 2,899,884 2,327, Mariposa Land Co Ltd 3738 Cross Creek Rd Vacant - Commercial 746,167 2,197, Malibu Cross Creek Ltd (4) Civic Center Wy Malibu Country Mart II Shopping Center 9,591,049 1,818, DB Malibu Holdco LLC N/A Vacant - Commercial 6,444,189 1,669, Cross Creek LLC (4) 3900 Cross Creek Rd Malibu Country Mart III Shopping Center 5,008,256 1,641, Jamestown Premier Malibu Village LP Pacific Coast Hwy Malibu Creek Plaza/Malibu Village Shopping Center 61,198,800 1,574, PCH Project Owner LLC N/A Vacant - Residential 20,065,975 1,160, Mariposa Land Company Ltd N/A Vacant Commercial 232,238 1,030, Jamestown Premier Malibu Village LP Cross Creek Rd Malibu Creek Plaza/Malibu Village Shopping Center 61,198, , Cross Creek Road Llc 3806 Cross Creek Rd Commercial/Retail 2,655, , Miramar Property Investment Co Stuart Ranch Rd Commercial/Office 5,932, , Mariposa Land Company Ltd 3730 Cross Creek Road Under Utilized Commercial 1,005, , Malibu La Paz Ranch LLC N/A Vacant - Commercial 3,261, , KW Partnership LP And KW Two Partnership LP (2) Pacific Coast Highway Chevron/Urgent Care/Vacant 8,528, , Archdiocese of LA Educ And Welfare Corp Our Our Lady of Malibu Church and 3625 Winter Canyon Rd Lady of Malibu School (School structure) 913, , Steven J Knapp Tr, Steven J Knapp Trust, Joan Knapp Tr, And Knapp Trust 3700 La Paz Ln Vacant - Commercial 93, , Reco Land Corp (3) N/A Vacant - Commercial 589, , GTE Calif Inc, SB of E Par 3 Map N/A Utility Building 0 331, Mariposa Land Company Ltd 3728 Cross Creek Rd Vacant - Commercial 453, , CCW Partners LLC Civic Center Way Office 8,300, , And Malibu Rd LLC Malibu Rd Office 1,654, , Roman Catholic Archbishop of LA 3625 Winter Canyon Rd Our Lady of Malibu Church and 584, ,

26 Assessment Number Parcel Owner Property Address Parcel Description Fiscal Year Assessed Value Confirmed AD No Assessment Valueto-Lien Percent Share of Assessment School 18 Malibu Rd Project Owner LLC Malibu Road Vacant Residential 1,011, , Malibu Rd Project Owner LLC Malibu Road Vacant Residential 2,244, , Malibu Rd Project Owner LLC Malibu Road Vacant Residential 1,504, , Malibu Rd Project Owner LLC Malibu Road Vacant Residential 2,318, , Reco Land Corp (3) N/A Vacant - Single Family Medium 234, , Chevron USA Inc N/A Vacant - Commercial 481, , So Calif Edison Co, SB of E Par 1 Map A 3808 Cross Creek Rd Utility Building 0 185, Roman Catholic Archbishop of LA 3625 Winter Canyon Rd Our Lady of Malibu Church and School (Father's Residence) 523, , First Oaks Oil LLC Pacific Coast Highway Gas Station 5,551, , Morton M And Leslie Gerson Trs, Gerson Family Trust Malibu Rd Office 493,204 65, Cross Creek Real Estate Group LLC And Malibu Pacific Coast Highway Realty/Office 1,966,703 44, Bear LLC 57 MBC Colony Plaza LLC (1) (3) N/A Vacant Commercial 1,811 23, Reco Land Corp (1) (3) N/A Vacant Commercial 385 8, Grant Total: $ 338,044,758 $ 58,548, % (1) (2) (3) (4) In escrow to be sold to the City for the purpose of siting the wastewater treatment plant. The City anticipates prepaying the assessments on the parcels when acquired. Affiliated ownerships. Affiliated ownerships. Affiliated ownerships. Source: David Taussig & Associates. 20

27 Largest Property Owners Due to the common ownership of several parcels within the Assessment District, a few owners are responsible for a large portion of the unpaid Assessments. Table 3 below sets forth the top ten property owners within the Assessment District by share of unpaid Assessments. Rank TABLE 3 CITY OF MALIBU ASSESSMENT DISTRICT NO DIRECT AND OVERLAPPING ASSESSMENT INDEBTEDNESS Owner Number of Parcels FY Assessed Value Confirmed AD No Assessment Value -to- Lien Percent Share of Assessment 1 KW Malibu Colony LLC 2 $ 77,889,286 $ 15,430, % 2 Malibu Country Mart 3 27,311,117 5,989, Malibu Bay Company 5 8,633,287 5,977, Malibu La Paz Ranch LLC 2 6,522,150 4,639, Mariposa Land Company Ltd. 4 2,437,683 4,279, DB Malibu Holdco LLC 2 9,344,073 3,997, Wave Property Inc. 1 14,000,000 3,576, Surfrider Partners LLC 1 12,780,978 2,846, Hitoshi Yamaguchi Trust, Tosh Trust, Eiko Moro Trust, and H and E Mori Trust 1 432,448 2,716, Jamestown Premier Malibu Village LP 2 122,397,600 2,475, All Others 19 56,296,136 6,618, Grand Total 42 $ 338,044,758 $ 58,548, % Source: David Taussig & Associates. The following is a description of each of the parcels owned by the top 10 property owners: KW Malibu Colony LLC Parcel 30 a commercial development located at Malibu Road. The property is zoned Commercial General. Total building area is 116,925 square feet (68,014 square feet of retail and 48,911 square feet of restaurant). Current tenants include Ralph s Starbucks, CVS, Subway and Bank of America, and several other retail and restaurant establishments. Parcel 29 a commercial development located at Malibu Road. The property is zoned Commercial General. Total building area is 116,925 square feet (68,014 square feet of retail and 48,911 square feet of restaurant). Current tenants include Chevron and an urgent care facility. Approximately onehalf of the property is currently vacant. Malibu Country Mart Parcel 34 the Malibu Country Mart I commercial development located at 3835 Cross Creek Road consisting of high-end retail, restaurant and office uses. The property is zoned Commercial Visitor Serving I. Total building area is 29,068 square feet (19,737 square feet of retail, 18,025 square feet of restaurant and 1,306 square feet of office). Current tenants include the Ralph Lauren, Ted Baker, 7 for all Mankind, Morgan LeFay, John Varvatos, Coffee Bean Tea and Leaf and the Malibu Colony Company, and several other highend retail, commercial and restaurant establishments. 21

28 Parcel 33 the Malibu Country Mart II commercial development located at Civic Center Way consisting of high-end retail, restaurant and office uses. The property is zoned Commercial Visitor Serving I. Total building area is 39,076 square feet (19,996 square feet of retail, 4,700 square feet of restaurant and 14,380 square feet of office). Current tenants include Taverna Tony and Canvas, and several other high-end retail, commercial and restaurant establishments. Parcel 6 a restaurant, retail and office development located at 3900 Cross Creek Road. The property is zoned Commercial Visitor Serving I. Total building area is 13,061 square feet (4,686 square feet of retail, 5,245 square feet of restaurant and 3,130 square feet of office). Current tenants include L Occitane en Provence and Starbucks, and several other retail, commercial and restaurant establishments. Malibu Bay Company Parcel 27 vacant land located at south of the intersection of Pacific Coast Highway and Civic Center Way and north of Malibu Road. The property totals approximately 4.4 acres and is zoned Single Family Medium. Parcel 35 vacant land located south of Civic Center Way, north of Pacific Coast Highway and west of Webb Way. The property is zoned Commercial General and is expected to be used for retail and restaurant purposes. Total future building area is estimated at approximately 7,000 square feet. Parcel 44 vacant land located at the northeast corner of Civic Center Way and Stuart Ranch Road. The property is zoned Community Commercial and is expected to be used for retail, restaurant and office purposes. Total future building area is estimated at approximately 81,000 square feet. Parcels 56 and 57 vacant parcels located just west of the intersection of Civic Center Way and Pacific Coast Highway. The City is in escrow to acquire both parcels for the siting and construction of the wastewater treatment plant. Malibu La Paz Ranch LLC Parcels 48 and 49 vacant land located east of La Paz Lane and north of Civic Center Way. The property is zoned as Town Center Overlay and is expected to be used for retail, restaurant and office purposes. Total future building area is estimated at approximately 132,000 square feet. Both parcels contain development conditions which would require the transfer of up to 2.3 acres to the City depending upon the density of the development. However, if such a transfer were to occur, the City s portion of the parcels would continue to be assessable as developed property. Mariposa Land Co. Ltd. Parcel 1 a small commercial development located at 3730 Cross Creek Road. The property is zoned Commercial Visitor Serving I. The parcel currently contains temporary structures used as a lumber and hardware store. Total building area is estimated at approximately 12,000 square feet. Parcel 4 vacant land located north of Pacific Coast Highway just west of Malibu Lagoon. The property is zoned Commercial Visitor Serving I and is expected to be used for retail and restaurant purposes. Total future building area is estimated at approximately 16,000 square feet. Parcel 5 vacant land located at 3728 Cross Creek Road. The property is zoned Commercial Visitor Serving I and is expected to be used for retail and restaurant purposes. Total future building area is estimated at approximately 4,500 square feet. 22

29 Parcel 10 vacant land, with temporary structures located thereon, located at 3738 Cross Creek Road. The property is zoned Commercial General and is expected to be used for retail and restaurant purposes. Total future building area is estimated at approximately 34,000 square feet. DB Malibu Holdco LLC Parcels 43 and 47 vacant land located at the northwest corner of the Civic Center Way and Cross Creek Road. The property is zoned as Commercial Visitor Serving I. These parcels are expected to be the site of a future Whole Foods grocery store, with total building area of approximately 38,000 square feet (9,000 square feet of retail and 29,000 square feet of restaurant). The property owner has obtained all of the planning approvals required for these parcels to be developed into a Whole Foods grocery store, except for voter approval which was added as a requirement after the passage of a voter initiative (Measure R). The Los Angeles County Superior Court ruled that such voter approval requirement was unconstitutional and enjoined the City from enforcing Measure R. The proponents of Measure R have appealed the ruling and may request that the Court of Appeal reinstate Measure R. If Measure R is not in effect, the proposed development may proceed; if Measure R is in effect, voter approval would be required for the development to proceed as planned and the City s voters have already rejected the project as entitled. See BONDOWNERS RISKS Measure R. Wave Property LLC Parcel 46 vacant land located on the west side of La Paz Lane at its current terminus. The property is Community Commercial. The parcel is owned by an entity affiliated with Pepperdine University and is expected to be developed into a parking lot for the purpose of providing parking for the Civic Center. Surfrider Partners LLC Parcel 41 vacant land located at the northwest corner of Civic Center Way and Stuart Ranch Road. The property is zoned Community Commercial and is expected to be used for retail and restaurant purposes. Total future building area is estimated at approximately 44,000 square feet. Hitoshi Yamaguchi Trust, Tosh Trust, Eiko Moro Trust, and H and E Mori Trust Parcel 45 vacant land located on the east side of Stuart Ranch Road opposite of Malibu City Hall. The property is zoned Community Commercial and is expected to be used for retail and restaurant purposes. Total future building area is estimated at approximately 42,000 square feet. Jamestown Premier Malibu Village LP Parcels 7 and 8 the Malibu Creek/Malibu Village commercial development located northeast of the intersection of Pacific Coast Highway and Cross Creek Road consisting of retail and restaurant uses. The properties are zoned Commercial Visitor Serving I. Total building area is approximately 52,000 square feet (44,500 square feet of retail and 7,500 square feet of restaurant). Current tenants include Wells Fargo Bank and True Religion, and several other retail and restaurant establishments. Direct and Overlapping Indebtedness The ability of an owner of land within the Assessment District to pay the Assessment Installments could be affected by the existence of other taxes and assessments imposed upon the property. These other taxes and assessments securing the repayment of overlapping debt in the Assessment District are set forth in Table 3 (the Debt Report ). The Debt Report sets forth those entities which have issued debt and does not include entities which only levy or assess fees, charges, ad valorem taxes or special taxes. See Table 4 below for all entities levying taxes, assessments or other charges on property in the City. The Debt Report does not 23

30 include the principal amount of the Bonds. The Debt Report has been derived from data assembled and reported to the City by the Assessment Engineer as of April 1, The Debt Report includes information for all parcels with unpaid Assessments. Neither the City nor the Underwriter has independently verified the information in the Debt Report and do not guarantee its completeness or accuracy. See Allocation of Assessment herein for a discussion of potential reduction in Assessments if the City receives grant moneys from the State Board. TABLE 4 CITY OF MALIBU ASSESSMENT DISTRICT NO DIRECT AND OVERLAPPING ASSESSMENT INDEBTEDNESS Overlapping Debt FY Tax Levy Amount of Levy on Parcels in AD No Percent of Levy on Parcels in AD No Total Debt Outstanding District Share of Total Debt Outstanding Los Angeles County Regional Park and Open Space District $28,304,881 $2, % $82,880,000 $7,766 Total Overlapping Debt: $ 7,766 Plus: AD No Assessment Lien: 58,548,025 Estimated share of Direct and Overlapping Debt: $ 58,555,792 District Wide Fiscal Year Assessed Value (1) : $ 338,044,758 Value-to-Lien Ratio: 5.77 (1) Excludes parcels that prepaid Assessments. Source: David Taussig & Associates. General BONDOWNERS RISKS In order to pay debt service on the Bonds, it is necessary that unpaid Assessment Installments on parcels within the City are paid in a timely manner. The Reserve Fund will be used to pay debt service on the Bonds if delinquent Assessment Installments should occur. The Assessments are a lien on the parcels of land and the City has covenanted to institute foreclosure proceedings under certain circumstances against parcels with delinquent Assessment Installments. Failure by owners of the parcels to pay Assessment Installments when due, depletion of the Reserve Fund or the inability of the City to sell parcels which have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent Assessment Installments for such parcels may result in the inability of the City to make full or punctual payments of debt service on the Bonds, and Bondowners would therefore be adversely affected. The 1915 Act provides that except under certain circumstances property is to be sold upon foreclosure at a Minimum Price. Minimum Price as defined in the 1915 Act is the amount equal to the delinquent installments of principal or interest of the assessment or assessment, together with all interest penalties, costs, fees, charges and other amounts more fully detailed in the 1915 Act. The court may authorize a sale at less than the Minimum Price if the court determines that sale at less than the Minimum Price will not result in an ultimate loss to the Bondowners or, under certain circumstances, if owners of 75% or more of the outstanding Bonds consent to such sale. There can be no assurance that foreclosure proceedings will occur in a timely manner so as to avoid depletion of the Reserve Fund and a delay in payments of debt service on the Bonds. See SECURITY FOR THE BONDS Covenant to Foreclose and Court Foreclosure Proceedings. 24

31 Unpaid Assessment Installments do not constitute a personal indebtedness of the owners of the parcels within the Assessment District. There is no assurance the owners will be able to pay the Assessment Installments or that they will pay such installments even though financially able to do so. Measure R On November 4, 2014, the voters of the City approved ballot initiative Measure R. As its first component, Measure R contains a set of restrictions designed to limit the development of formula retail establishments in the City. Measure R defined Formula Retail business as any business for which there are ten or more locations worldwide that share two or more specified criteria. Measure R: (i) prohibits any new Formula Retail tenant larger than 2,500 square feet (ii) requires all Formula Retail tenants to obtain a conditional use permit, and (iii) prohibits a shopping center from leasing more than 30% of its square footage, or 30% of its leasable retail spaces, to Formula Retail tenants. The second component of Measure R requires voter approval of every new proposed commercial project over 20,000 square feet. Shortly after the passage of Measure R, an affiliate of DB Malibu Holdco, Inc. (the Petitioner ), the owner of Parcel Nos. 43 and 47 within the Assessment District upon which it proposes to build a Whole Foods grocery store, brought a lawsuit against the City seeking to enjoin the City from enforcing Measure R. On December 14, 2015, the trial court held that Measure R is invalid and enjoined the City from enforcing Measure R. Proponents of Measure R intervened in the case and filed an appeal that is still pending. Should the trial court s decision be overturned on appeal Measure R will be reinstated and development of commercial or mixed use projects over 20,000 square feet, including the Whole Foods grocery store, will require voter approval. The City can provide no assurance regarding whether voter approval will be required to develop large commercial and mixed use projects on parcels within the Assessment District. Risks of Real Estate Secured Investments Generally The Bond Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the Assessment District, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes and floods), which may result in uninsured losses. No assurance can be given that the individual homeowners will pay Assessments in the future or that they will be able to pay such Assessments on a timely basis. See RISK FACTORS Bankruptcy and Foreclosure below, for a discussion of certain limitations on the City s ability to pursue judicial proceedings with respect to delinquent parcels. Limited Obligations The Bonds and related interest are not payable from the general funds of the City. Except with respect to the Assessments, the credit and the taxing power of the City is not pledged for the payment of principal or interest of the Bonds, and, except as provided in the Fiscal Agent Agreement, no Owner of the Bonds may compel the exercise of any taxing power by the City or force the forfeiture of any City property. The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of the City s property or upon any of the City s income, receipts or revenues, except the Assessments and other amounts pledged under the Fiscal Agent Agreement. 25

32 Failure to Enter into State Loan Agreement As discussed under FINANCING PLAN, the City expects to enter into the State Loan Agreement which includes a grant and loans at relatively low interest rates. Should the City not enter into the State Loan Agreement, the City would be required to issue Additional Bonds to finance the Improvements, and such Additional Bonds would likely be issued at interest rates significantly higher than that which is expected under the State Loan Agreement and cause a delay in the completion of the Improvements. Additionally, there is no assurance in such event that the City would receive the grant moneys from the State Board. Accordingly, should the City need to issue these Additional Bonds, property owners within the Assessment District would be required to pay the increased interest costs and to pay additional principal to offset the loss of the grant moneys. MOU Related Property Owner Penalties Under the MOU, all property owners within the Phase I area are required to connect to the wastewater treatment plant by June As discussed above, construction of the wastewater treatment plan will not be completed by June See FINANCING PLAN. Accordingly, Phase I property owners will be unable to connect to the wastewater treatment plant by June As a result, such property owners may be responsible for monetary fines or other penalties levied by the State Board or other governing authority. The imposition of fines or restraining orders against Phase I property owners could affect their ability to develop or continue operating their properties as currently contemplated, which could impact the value of the property within the Assessment District and the property owners ability or willingness to pay the Assessments. The State Board has provided no assurances regarding extending the June 2017 deadline but is working collaboratively with the City to construct the Improvements and has offered to provide financing in the form of grants and low interest loans. The City can make no assurance regarding whether property owners in Phase I will be subject to such penalties. Delinquency Resulting in Ultimate or Temporary Loss on Bonds If a temporary deficiency occurs in the Redemption Fund with which to pay the principal of or interest on Bonds that have then matured, or the principal and interest on Bonds coming due during the current year, unless it appears to the Treasurer that there will be an ultimate loss to the Bondowners, the Treasurer shall cause the Fiscal Agent to pay the principal of Bonds which have matured as presented and make interest payments on the Bonds when due, as long as there are available funds in the Redemption Fund, in the order of priority and as required by the Fiscal Agent Agreement. If it appears to the Treasurer that there is a danger of an ultimate loss accruing to the Bondowners for any reason, the Treasurer is required pursuant to the 1915 Act to withhold payment on all matured Bonds and interest on all Bonds and report the facts to the City so that the City may take proper action to equitably protect all Bondowners. See APPENDIX C SUMMARY OF FISCAL AGENT AGREEMENT. Non-Cash Payments of Assessments The 1915 Act may permit the owner of a parcel that is subject to an unpaid Assessment Installment to tender any Bond secured by such Assessment in payment or partial payment of any installment of the Assessment or interest or penalties thereon which may be due or payable. A Bond so tendered is to be accepted at the par amount thereof and credit is to be given for any interest thereon accrued to the date of the tender. Thus, if Bonds can be purchased at a discount, it may be to the advantage of a property owner to pay amounts due with respect to an assessment by tendering a Bond. Such a practice would decrease the cash flow available to the City to make payments with respect to other Bonds then outstanding and could result in a default in payment on the Bonds. 26

33 Limited City Obligation Upon Delinquency Pursuant to the 1915 Act, the City has elected not to be obligated to advance funds from the treasury of the City for delinquent Assessment Installments. The only obligation of the City with respect to such delinquencies and the consequent deficiencies in the Redemption Fund is to advance money to the Redemption Fund from the Reserve Fund. The City has no obligation to replenish the Reserve Fund except to the extent that delinquent Assessment Installments are paid or proceeds from foreclosure sales are realized. There is no assurance that the balance in the Reserve Fund will always be adequate to pay all delinquent Assessment Installments and if during the period of delinquency there are insufficient funds in the Reserve Fund, a delay may occur in payments to the Bondowners. Disclosures to Future Purchasers The willingness or ability of an owner of a parcel to pay the Assessments even if the value of the parcel is sufficient may be affected by whether or not the owner was given due notice of the Assessments authorization at the time the owner purchased the parcel, was informed of the amount of the Assessments on the parcel and the risk of such a levy, and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The City has caused a notice of the Assessment lien to be recorded in the Office of the Recorder for the County against each parcel. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Assessments obligation in the purchase of a property within the Assessment District or lending of money thereon. Payment of the Assessments is not a Personal Obligation of the Owners An owner of a parcel subject to an Assessment is not personally obligated to pay such Assessment. Rather, the Assessment is an obligation which is secured only by a lien against the parcel. If the value of a parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Assessment, the City has no recourse against the owner. Development Uncertainties General Many of the parcels located within the Assessment District are vacant and undeveloped. In general, undeveloped land is less valuable than developed land and, therefore, will provide less security for the payment of the Assessments in the event that the City is required to initiate sale or foreclosure proceedings as a result of delinquencies in the payment of Assessment Installments prior to development of such land. Land development operations are subject to comprehensive federal, state and local regulations. See Measure R herein. Approvals are required from various governmental agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning and building requirements and numerous other matters. Failure to obtain any such approval could adversely affect land development operations. The development and marketing of the undeveloped land within the Assessment District may also be adversely affected by competition from other developments, changes in general economic conditions, fluctuations in the real estate market in the area, and other similar factors. The development and marketing of land within the Assessment District may be particularly dependent on factors which are unique to Southern California. Between 2007 and 2012, the real estate market in Southern California experienced a significant downturn with taxable values dropping significantly and many homeowners and developers experiencing foreclosure, bankruptcy and other financial strains. In 2013 the real estate market in Southern California began to stabilize and the taxable 27

34 value of real property in Southern California has been increasing ever since. The City can make no assurance with respect to whether taxable values of real property will decline in the future. Additionally, due to the prohibitions in the MOU, it is likely that vacant property in the Assessment District may not be able to be developed until the Improvements are completed. See MOU Related Property Owner Penalties. Development within the Assessment District could be significantly impacted if the City failed to construct the Improvements. Concentration of Ownership As of April 1, 2016, the ten largest property owners by unpaid Assessment were responsible for 88.6% of the total unpaid Assessments. The timely payment of principal of and interest on the Bonds depends upon the willingness and ability of the current and future property owners in the Assessment District to pay the unpaid Assessments prior to delinquency. General and local economic conditions and governmental requirements or restrictions may affect the willingness of the current property owners, or any successor property owners, to pay the unpaid Assessments, and there is no assurance that the current property owners, or any successor property owners, will pay such unpaid Assessments even if financially able to do so. Due to the concentration of ownership of the property within the Assessment District, a failure by any of these property owners or any successor property owner thereto to pay their share of the unpaid Assessments may result in a default in the payment of debt service on the Bonds. See THE ASSESSMENT DISTRICT Largest Property Owners. Land Values The value of the property within the Assessment District is a critical factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of Assessment Installments, the Assessment District s only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the delinquent Assessment Installments. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the assessments. See THE ASSESSMENT DISTRICT Value-to-assessment lien ratios herein. The assessed values set forth in this Official Statement do not represent market values arrived at through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current owner, adjusted annually by an amount determined by the County Assessor, generally not to exceed an increase of more than 2% per Fiscal Year. No assurance can be given that a parcel could actually be sold for its assessed value. Additionally, market values within the Assessment District could be impacted by a failure to complete the Improvements in a timely manner. No assurance can be given that any bid will be received for a parcel with delinquent Assessment Installments offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquent Assessment Installments. See SECURITY FOR THE BONDS Covenant to Foreclose and Court Foreclosure Proceedings. Bankruptcy and Foreclosure The payment of Assessments and the ability of the City to foreclose the lien of delinquent unpaid Assessment Installments, as discussed in the section entitled SECURITY FOR THE BONDS Covenant to Foreclose and Court Foreclosure Proceedings herein, may be limited by bankruptcy, insolvency, or other laws generally affecting creditors rights or by the law of the State of California relating to judicial foreclosure. In addition, the prosecution of a foreclosure could be delayed due to crowded local court calendars or procedural delays. 28

35 The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. Although bankruptcy proceedings would not cause the Assessments to become extinguished, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings and could result in delinquent Assessment Installments not being paid in full. Where property is encumbered by liens securing mortgage loans, it is highly probable that bankruptcy of a property owner would delay foreclosure for an extended period of time. Such a delay would increase the likelihood of a delay or default in payment of the principal and interest on the Bonds. FDIC/Federal Government Interests in Parcels The ability of the City to collect interest and penalties specified by the 1915 Act and to foreclose the lien of delinquent Assessment Installments may be limited in certain respects with regard to parcels in which the Federal Deposit Insurance Corporation (the FDIC ) has or obtains an interest. Specifically, in the event that any financial institution making a loan which is secured by parcels is taken over by the FDIC and the applicable Assessment Installment is not paid, the remedies available to the City may be constrained. The FDIC s policy statement regarding the payment of state and local real property taxes (the Policy Statement ) provides that taxes other than ad valorem taxes which are secured by a valid lien in effect before the FDIC acquired an interest in a property will be paid unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement provides that the FDIC generally will not pay installments of non-ad valorem taxes which are levied after the time the FDIC acquires its fee interest, nor will the FDIC recognize the validity of any lien to secure payment except in certain cases where the Resolution Trust Corporation had an interest in property on or prior to December 31, Moreover, the Policy Statement provides that, with respect to parcels on which the FDIC holds a mortgage lien, the FDIC will not permit its lien to be foreclosed out by a taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any penalties, fines or similar claims imposed for the non-payment of taxes. If a parcel with unpaid Assessments within the Assessment District is owned by a federal governmental entity, or a private deed of trust secured by a parcel with unpaid Assessments within the Assessment District is owned by a federal governmental entity, the ability to foreclose on the parcel to collect delinquent Assessments may be limited. Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel with unpaid Assessments within the Assessment District but does not pay taxes and assessments levied on the parcel (including Assessments), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments. Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the City wishes to foreclose on the parcel as a result of delinquent Assessments, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Assessments and preserve the federal government s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association ( FNMA ) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States. 29

36 The City has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels with unpaid Assessments within the Assessment District, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding The City s remedies may also be limited in the case of delinquent Assessment Installments with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug Enforcement Administration) have or obtain an interest. The City is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency with respect to a portion of the parcels in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale would prevent or delay the foreclosure sale. No Acceleration Provision The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the Bonds or the Fiscal Agent Agreement or in the event interest on the Bonds becomes included in gross income for federal income tax purposes. See Limitations on Remedies below. Limitation on Remedies Remedies available to the owners of the Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Bonds. Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Fiscal Agent Agreement to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of creditors rights, by equitable principles and by the exercise of judicial discretion. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the owners of the Bonds. Natural Disasters The Assessment District, like many California communities, may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. Southern California is a seismically active area. Seismic activity represents a potential risk for damage to buildings, roads and property within the Assessment District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. The City is located in an area of high fire risk. Significant wildfires have burned portions of the City in recent years including property adjacent to the Assessment District. Risk of wildfire is significant for all property within the Assessment District. In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the Assessment District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Assessment Installments when due. In addition, the value of land in the Assessment District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Assessment Installments. 30

37 Hazardous Substances While government taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may also be relevant. The value of a parcel may be reduced as a result of a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as CERCLA or the Super Fund Act, is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels within the Assessment District be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition because the prospective purchaser of such a parcel will, upon becoming the owner of such parcel, become obligated to remedy the condition just as the seller of such a parcel is. Limited Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Although the City has committed to provide certain statutorily-required financial and operating information, there can be no assurance that such information will be available to Bondowners on a timely basis. The failure to provide the required annual financial information does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current information, the absence of a credit rating for the Bonds or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. Future Debt Issuance The ability of an owner of land within the Assessment District to pay the Assessment Installments could be affected by the existence of other taxes and assessments imposed upon parcels in the Assessment District with unpaid Assessments. In addition, the City and other public agencies whose boundaries overlap those of the Assessment District could impose additional taxes or assessment liens on the property within the Assessment District in order to finance public improvements or services to be located or provided inside of or outside of such area. The lien created on the property within the Assessment District through the levy of such additional taxes may be on a parity with the lien of the assessments levied by the City. See THE ASSESSMENT DISTRICT Direct and Overlapping Indebtedness herein. The imposition of additional liens on a parity with the Assessment Installments may reduce the ability or willingness of the landowners to pay the Assessment Installments and increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Assessment Installments. The City does not have control over the ability of other entities and districts to issue indebtedness secured by special taxes, ad valorem taxes or assessments payable from all or a portion of the property within the Assessment District. In addition, the landowners within the Assessment District may, without the consent or knowledge of the City, petition other public agencies to issue public indebtedness secured by special taxes, ad valorem taxes or assessments. Any such special taxes, ad valorem taxes or assessments could reduce the estimated value-to-lien ratios for property within the Assessment District described herein. 31

38 Ballot Initiatives From time to time constitutional initiatives or other initiative measures may be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State, the County or local districts to increase revenues or to increase appropriations, or on the ability of the landowners to complete their developments. See Measure R above. Constitutional Amendment Articles IIIC and IIID An initiative measure commonly referred to as the Right to Vote on Taxes Act (the Initiative ) was approved by the voters of the State of California at the November 5, 1996 general election. The Initiative added Article XIIIC ( Article XIIIC ) and Article XIIID ( Article XIIID ) to the California Constitution. According to the Title and Summary of the Initiative prepared by the California Attorney General, the Initiative limits the authority of local governments to impose taxes and property-related assessments, fees and charges. Article XIIID requires that, beginning July 1, 1997, the proceedings for the levy of any assessment by the City under the Act (including, if applicable, any increase in such assessment or any supplemental assessment under the Act) must be conducted in conformity with the provisions of Section 4 of Article XIIID. The City completed its proceedings for the levy of assessments in the Assessment District on April 12, 2010 after complying with the procedural requirements of Section 4 of Article XIIID. Under Section of the Act, any challenge to the proceedings or the Assessment must be brought within 30 days after the date the assessment was levied. Article XIIIC removes limitations on the initiative power in matters of local taxes, assessments, fees and charges. Article XIIIC does not define the term assessment, and it is unclear whether this term is intended to include assessments levied under the Act. In the case of the unpaid Assessments which are pledged as security for payment of the Bonds, the 1915 Act provides a mandatory, statutory duty of the City and the County Auditor to post Assessment Installments on account of the unpaid Assessments to the property tax roll of the County each year while any of the Bonds are outstanding, commencing with property tax year , in amounts equal to the principal of and interest on the Bonds coming due in the succeeding calendar year plus certain administrative costs. It is unlikely that the initiative power can be used to reduce or repeal the unpaid Assessments which are pledged as security for payment of the Bonds or to otherwise interfere with performance of the mandatory, statutory duty of the City and the County Auditor with respect to the unpaid Assessments which are pledged as security for payment of the Bonds. The interpretation and application of the Initiative has been and will continue to be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of any future determination. Continuing Disclosure CONCLUDING INFORMATION The City has agreed to execute a Continuing Disclosure Agreement (the Disclosure Agreement ) in connection with the delivery of the Bonds for the benefit of the Underwriter, holders and beneficial owners of the Bonds to provide certain financial information and operating data relating to the City by the April 1 following the end of the City s fiscal year (the Annual Report ) and to provide notices of the occurrence of certain enumerated events (the Listed Events ). The Annual Reports will be filed on behalf of the City by U.S. Bank National Association (the Dissemination Agent ) with the Municipal Securities Rulemaking Board (the Repository ). Notices of Listed Events will be filed by the Dissemination Agent with the Repository. The specific nature of the information to be included in the Annual Report and the notices of Listed Events is set forth in APPENDIX F FORM OF CITY CONTINUING DISCLOSURE AGREEMENT. The City has 32

39 agreed to execute the Disclosure Agreement in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the Rule ). See APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT. It should be noted that the City is required to file certain financial statements with the Annual Report. This requirement has been included in the Disclosure Agreement solely to satisfy the provisions of the Rule. The inclusion of this information does not mean that the Bonds are secured by any resources or property of the City other than the Assessments and amounts pledged under the Fiscal Agent Agreement. See BONDOWNERS RISKS Limited City Obligation Upon Delinquency. It should also be noted that the list of significant events which the City has agreed to report includes items related to credit enhancements and ratings. These items have been included in the list solely to satisfy the requirements of the Rule. The Bonds have not been assigned a credit rating and have no credit enhancement. Within the past five years, the City has not failed to comply in all material respects with any previous undertaking with regard to the Rule to provide annual reports or notices of Listed Events. Notwithstanding the foregoing, on more than one occasion, certain of the City s filings were missing certain tabular financial information which was subsequently filed with the Repository. The full text of the Disclosure Agreement is set forth in Appendix F. Legal Opinion Certain proceedings in connection with the issuance of the Bonds are subject to the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel ( Bond Counsel ). The opinion of Bond Counsel attesting to the validity of the Bonds will be delivered with each Bond. A form of the opinion to be delivered by Bond Counsel is set forth in Appendix D hereto. Certain legal matters will be passed upon for the City by the City Attorney and by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Jones Hall, A Professional Law Corporation, San Francisco, California. Tax Matters In the opinion of Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is exempt from State of California personal income tax. With certain exceptions, the difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of the same maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond (to the extent the redemption price at maturity is greater than the issue price) constitutes original issue discount. Original issue discount accrues under a constant yield method. The amount of original issue discount deemed received by the Beneficial Owner of a Bond will increase the Beneficial Owner s basis in the Bond. Beneficial Owners of the Bonds should consult their own tax advisors with respect to taking into account any original issue discount on the Bonds. The tax discussion set forth above is included for general information only and may not be applicable depending upon a Bond Owner s particular situation. The ownership and disposal of the Bonds and the accrual or receipt of interest on the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. BEFORE PURCHASING ANY OF THE BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR INDEPENDENT TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES RELATING TO THE BONDS AND THE TAXPAYER S PARTICULAR CIRCUMSTANCES. 33

40 Litigation A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix D. There is no action, suit, or proceeding known by the City to be pending at the present time restraining or enjoining the delivery of the Bonds or in any way contesting or affecting the validity of the Bonds or any proceedings of the City taken with respect to the execution or delivery thereof. A no litigation certificate executed by the City will be required to be delivered to the Underwriter with respect to these matters simultaneously with the delivery of the Bonds. Financial Interests The fees being paid to the Underwriter, Bond Counsel, Disclosure Counsel and Underwriter s Counsel are contingent upon the issuance and delivery of the Bonds. From time to time, Bond Counsel represents the Underwriter on matters unrelated to the Bonds. No Rating The City has not applied to and does not contemplate applying to any bond rating agency for the assignment of a rating on the Bonds. Underwriting The Bonds are being purchased by the Underwriter. The Underwriter has agreed to purchase the Bonds at a price of $6,122, ($6,295, principal amount, less net original issue discount in the amount of $68, and less an Underwriter s discount of $103,950.00). The Bond Purchase Agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the offering prices stated on the cover page hereof. The offering prices may be changed from time to time by the Underwriter. 34

41 Miscellaneous All quotations from, and summaries and explanations of, the Fiscal Agent Agreement, the Continuing Disclosure Agreement and other statutes and documents contained herein do not purport to be complete, and reference is made to said documents and statutes for full and complete statements of their provisions. This Official Statement is submitted only in connection with the sale of the Bonds by the City. All estimates, assumptions, statistical information and other statements contained herein, while taken from sources considered reliable, are not guaranteed by the City or the Underwriter. The information contained herein should not be construed as representing all conditions affecting the City or the Bonds. The execution and delivery of this Official Statement have been authorized by the City. CITY OF MALIBU By: /s/ Reva Feldman City Manager 35

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43 APPENDIX A ASSESSMENT DIAGRAM

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45 IN;''!;!!' SHEET 1 OF 2 ASSESS MEN T DIAGRA M FOR JAN 2 S 21l& CITY OF MALIBU ASSESS MENT DISTRICT NO (CIVIC CE NTE R WAS TEWATER TREAT MENT FAC ILITY - PHASE I) CITY OF MALI BU. LOS ANGELES COUNTY, CALIF ORN IA COpy of Document Recorded Hal not been compared T [ful with original. QriglnSIS will be returned when processing has been completed. LOS ~~EtES COUJrfT't' REOISTIIAR-RECOROER Filed in the office of the City Clerk of the City of Malibu this!-y_~ day of J~-'l<!.~_, C~~~th~tcl- M~lib~--- County of Los Angeles, State of California Recorded in the office of the City Engineer this ' ~~ day of J~~_~~!:j_, ~~~ - Robert Brager, PI City Engineer, City of Malibu Reference is hereby made to the Assessor maps of the Coun ty of Los Angeles for an exact description of the lines and dimensions of each lot and parcel. N A-1 ~ ~ Filed this day of, 2016, at the hour of o'clock m, in Book of Maps of Assessment and Community Facilities Districts at page and as Instrument No., in the office of the County Recorder in the County of Los Angeles, State of California. County Recorder of The County of Los Angeles ~ 57~ ~>~ ' ClOO' 1.000' PREPARED BY DAVID TAUSSIG & ASSOCIATES, INC. '70 \...!!J Assessment District Assessment Number

46 /#/31 SHEET 2 OF 2 ASS ESS MENT DIAGRAM FOR CITY OF MALI BU ASSESSMEN T DIST RICT NO (C IVI C CE NT ER WASTEWAT ER TREATMENT FACI LI TY - PHAS E I) CITY OF MALIBU, LOS ANGE LES COUNTY, CA LI FOR NIA A-2 ASSESSMENT NUMBER A.P.N ASSESSMENT NUMBER A.P.N Reference is hereby made to the Assessor maps of the County of Los Angeles for an exact description of the lines and dimensions of each lot and parcel. An assessment was levied by the City Council on the lots, pieces, and parcels of land shown on this assessment diagram. The assessment was levied on the _1-.?_~_ day of J~~~o,(_~_, Reference is mode to the assessment roll recorded in the office of the City Engineer for the exact amount of each assessment levied against each parcel of land shown on this assessment diagram. -~~j2~ Lisa Pope City Cle rk of the City of Malibu PREPARED BY DAVID TAUSSIG & ASSOCIATES, INC.

47 APPENDIX B ENGINEER S REPORT

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49 MODIFIED ENGINEER S REPORT CITY OF MALIBU ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) December 9, 2015 Prepared for CITY OF MALIBU Stuart Ranch Road Malibu, CA Prepared by DAVID TAuS5IG & AssocIATEs, INC Birch Street, Suite 6000 Newport Beach, CA 92660

50 MODIFIED ENGINEER S REPORT ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) CITY OF MALIBU Pursuant to the provisions of the Municipal Improvement Act of 1913,H being Division 12 of the Streets and Highways Code of the State of California and as amended (the Act ), and in accordance with the Resolution Ordering Changes to the Engineer s Report, being Resolution No , adopted by the CITY COUNCIL of the City of Malibu (the City Council ), STATE OF CALIFORNIA, in connection with the proceedings for ASSESSMENT DISTRICT NO (Civic Center Wastewater Treatment Facility - Phase I) (hereinafter referred to as the Assessment District ), the undersigned herewith submits the Modified Engineer s Report for the Assessment District (the Modified Report ), consisting of seven (7) parts ( Parts ) as follows: PART I - PLANS AND SPECIFICATIONS AND DESCRIPTION OF IMPROVEMENTS The plans and specifications for the proposed improvements are on file in the Offices of the City Clerk and the Director of Public Works of the City of Malibu (the City ) and are referenced herein and incorporated as if attached and a part of this Modified Report. This Part also contains a description of the proposed improvements to be installed by the Assessment District. PART Il-IMPROVEMENT COST ESTIMATE This Part contains an estimate of the cost of the proposed improvements, including incidental costs and expenses in connection therewith. PART III - ANNUAL ADMINISTRATIVE COSTS This Part contains the maximum annual amount to be assessed to pay costs associated with the administration and collection of assessments, administration or registration of bonds, and/or reserve or other related funds. This Part contains the following information: PART IV - ASSESSMENT ROLL 1. A proposed assessment of the total amount of the costs and expenses of the proposed improvements upon the several subdivisions of land within the Assessment District, in proportion to the estimated benefits to be received by such subdivisions, from said improvements, as set forth upon the assessment roll filed herewith and made a part thereof; and 2. A proposed maximum annual assessment upon the several subdivisions of land within the Assessment District to pay costs incurred by the City and not otherwise reimbursed which result from the administration and collection of assessments. Modified Engineer~ Report Page 1 City ofmalibu Assessment District No December 9, 2015

51 PART V - ASSESSMENT DIAGRAM This Part contains a diagram showing the Assessment District, the boundaries and the dimensions of the subdivisions of land within said Assessment District, as the same existed at the time of the passage of the Resolution No ( Resolution of Intention ), and is filed herewith and made a part hereof, and part of the assessment. PART VI- REPORT UNDER PART 7.5 OF DIVISION 4 OF THE CALIFORNIA STREETS AND HIGHWAYS CODE This Part satisfies the requirements of Part 7.5 of the Special Assessment Investigation, Limitation and Majority Protest Act of 1931, which is Division 4 of the Streets and Highways Code of the State of California. This Part identifies the total principal amount of all unpaid special assessments required or proposed to be levied, the total true value of the parcels within the Assessment District, and the total amount of the principal sum of unpaid special assessments proposed by this Assessment District. PART VII- CERTIFICATES This Part shall consist of sub-parts with the following information: A. Rights-of-way certificate; and B. Environmental certification. Dated thisj day of~ David Taussig & Associates, Inc. / Steve Runk R.C.E. C23473 Assessment Engineer City of Malibu State of California Modified Engineer s Report Page 2 City of Malibu Assessment District No December 9, 2015

52 PRELIMINARY APPROVAL BY THE CITY COUNCIL OF THE CITY OF MALIBU, CALIFORNIA, ON THE ~29~ DAY OF Un, City Clerk City of Malibu State of California FINAL APPROVAL BY THE CITY COUNCIL OF THE CITY OF MALIBU, CALIFORNIA, ON THE2Sth DAY OF (J~Vlc~utr~ ity Clerk City of Malibu State of California Mod~,fied Engineer s Report Page 3 City of Malibu Assessment District No December 9, 2015

53 MODIFIED ENGINEER S REPORT ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) CITY OF MALIBU PART I PLANS AND SPECIFICATIONS AND DESCRIPTION OF IMPROVEMENTS The plans and specifications which describe the general nature, location, and extent of the improvements for the Assessment District are on file in the Offices of the City Clerk and the Director of Public Works of the City and are referenced herein and incorporated as if attached and a part of this Modified Report. A map showing the general location and improvements for the Assessment District is attached as Exhibit A. A general description of the improvements is set forth below. DESCRIPTION OF WORKS OF IMPROVEMENT The works of improvements to be financed by the Assessment District will include the design and construction of the wastewater treatment plant, wastewater collection and recycled water distribution system, and a recycled water injection system required pursuant to the Memorandum of Understanding Regarding Phased Implementation of Basin Plan Amendment Prohibiting On- Site Wastewater Disposal Systems in the Malibu Civic Center Area entered into by and between the City of Malibu, the Regional Water Quality Control Board, Los Angeles, and the State Water Resources Control Board (the MOU ). It should be noted that the purpose of the recycled water distribution and injection system is the disposal of treated wastewater. The Assessment District will also finance the acquisition of the land on which the wastewater treatment plant will be located. Modified Engineer ~c Report Page 4 City of Malibu Assessment District No December 9, 2015

54 MODIFIED ENGINEER S REPORT ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) CITY OF MALIBU PART II IMPROVEMENT COST ESTIMATE This Part presents the estimated cost of the works of improvements. Table TI-i shows the gross and net cost of the works of improvements. There are three adjustments made to the gross cost of the works of improvements to arrive at the net assessable costs. First, pursuant to Article XIII D, Section 1(a) of the California Constitution, the cost of the works of improvements necessary to serve only those parcels within the Assessment District is separated from the total cost of the works of improvements. In the case of the works of improvements for the Assessment District, the wastewater collection system and recycled water distribution system have been oversized in order to accommodate potential wastewater flow and recycled water attributable to property located in future phases identified in and subject to the provisions of the MOU. This Assessment District will not pay for the cost of this oversizing. Second, excess County of Los Angeles sewer project funds in the amount of $1,172,652 are applied as a credit against the estimated design cost of the works of improvements. Third, the estimated cost of the works of improvement are adjusted to reflect the funding of a portion of the design costs by Community Facilities District No of the City of Malibu ( CFD ). In January of 2013, CFD issued $6,500,000 in bonds to fund $5,000,000 of design costs. The Assessment District will pay off and refinance the CFD No indebtedness. Therefore, the cost of the retirement of the CFD indebtedness ($6,346,324.27) is added and the amount of the design costs funded by CFD ($5,000,000) are deducted from the cost of the works of improvements. Fourth, the estimated cost of the works of improvement are further adjusted to reflect the funding of a portion of the construction costs by a grant through the Water Recycling Funding Program of the California State Water Resources Control Board. The estimated assessment amount corresponding to the financing of the net cost of the works of improvements is shown in Table The net improvement costs will be assessed to each property in accordance with the Method of Assessment set forth in Exhibit B. The Assessment Roll identifying each parcel of real property within the Assessment District and its assessment is included in Exhibit C. As with the description of the improvements, the improvement costs are preliminary estimates. Modified Engineer s Report Page 5 City of Malibu Assessment District No December 9, 2015

55 TABLE 11-1 ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) IMPROVEMENT COST ESTIMATE Net Gross Assessable Costs Adjustments Costs I. Construction A. Wastewater Treatment Plant $22,305, $21,889, Grant ($416,000.00) B. Wastewater Treatment Plant Site $4,100, $4,100, C. Collection/Distribution System $17,825, Collection System $14,076, Distribution System $6,933, Oversizing Credit ($1,600,533.00) 4. Grant ($1,584,000.00) D. Recycled Water Injection System $2,186, $2,186, II. Design $7,416, $7,391, Oversizing Credit ($199,000.00) 2. Los Angeles County Credit ($1,172,652.00) 3. CFD Credit ($5,000,000.00) 4. PayoffofCFD $6,346, III. CMlEngineering Services $4,017, $4,017, TOTAL $61,036, ($3,625,860.73) $57,410, The oversizing credit and grant shown under I.C are allocated between the wastewater collection system and the recycled water distribution system in proportion to the associated hard costs. Modified Engineer ~c Report Page 6 City of Malibu Assessment District No December 9, 2015

56 TABLE 11-2 ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) BOND ASSESSMENT ESTIMATE Estimated Costs and Expenses As Preliminarily As Description Approved Confirmed I. Total Amount to Assessment $49,725, $63,688, II. Facility Construction A. Treatment Plant $19,893, $25,989, B. Collection/Distribution System $8,532, $20,012, C. Design/CM/Engineering Services $11,291, $11,408, III. Assessment District Procedural and Formation Costs $158, $158, IV. Bond Issuance Costs A. Capitalized Interest/Construction Period Interest $5,469, $1,547, B. Bond/Loan Reserve Fund $3,709, $4,244, C. Underwriting, Legal, Professional Costs $670, $327, Modified Engineer ~c Report Page 7 City of Malibu Assessment District No December 9, 2015

57 TABLE 11-3 ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) RECAPITULATION OF IMPROVEMENT COSTS AND AMOUNT TO ASSESSMENT Estimated Costs and Expenses As Preliminarily As Description Approved Confirmed I. Total Amount to Assessment $49,725, $63,688, II. Works of Improvements Design and Construction $39,716, $57,410, III. Assessment District Procedural and Formation Costs $158, $158, IV. Bond/Loan Issuance Costs $9,849, $6,119, Modified Engineer ~c Report Page 8 City of Malibu Assessment District No December 9, 2015

58 MODIFIED ENGINEER S REPORT ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) CITY OF MALIBU PART III ANNUAL ADMINISTRATIVE COSTS NOTICE IS HEREBY GIVEN that, pursuant to Subdivision (f) of Section of the Streets and Highways Code of the State of California, an Annual Administrative Assessment shall be levied on each parcel and subdivision of land within the Assessment District to pay for the necessary costs and expenses incurred, and not otherwise reimbursed, resulting from the administration and collection of assessments and from the administration or registration of any bonds and/or reserve or other related funds. The maximum amount of such Annual Administrative Assessment for the Assessment District shall not exceed a total of $25,000 which may increase annually at a compound rate beginning January 1, 2016 by the lesser of (i) five percent (5%), or (ii) the annualized positive change, if any, in the U.S. Consumer Price Index, All Urban Consumers, for Los Angeles Riverside Orange County, as of January 1 of each year. The Annual Administrative Assessment for each such parcel of land shall be computed based on that parcel s proportionate share of the total annual assessment (exclusive of the Annual Administrative Assessment). The Annual Administrative Assessment is in lieu of the $8.00 per assessment installment allowed by law. Modified Engineer s Report Page 9 City of Malibu Assessment District No December 9, 2015

59 MODIFIED ENGINEER S REPORT ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) CITY OF MALIBU PART IV ASSESSMENT ROLL WHEREAS, on June 8, 2015, the City Council did, pursuant to the provisions of the Act, adopt its Resolution of Intention declaring its intention to order the construction of certain improvements, together with appurtenances and appurtenant work in connection therewith, and to form the Assessment District; and, WHEREAS, said Resolution of Intention, as required by law, did direct the appointed Assessment Engineer to make and file a report (the Engineer s Report ), consisting of the following: 1. Plans; 2. Specifications; 3. General Descriptions; 4. Cost estimate; 5. Assessment Diagram showing the Assessment District and the subdivisions of land contained therein; and 6. A proposed assessment of the costs and expenses of the works of improvement levied upon the parcels and lots of land within the boundaries of the Assessment District. For particulars, reference is made to the Resolution of Intention as previously adopted; and WHEREAS, on June 8, 2015, the City Council did adopt its Resolution No heretofore preliminarily approving the Engineer s Report; and, WHEREAS, subsequent to June 8, 2015, (i) RMC Water and Assessment Engineer notified the City that there was an error in the methodology it used to determine the organic load (the BOD ), (ii) the City has agreed to purchase the site on which the wastewater treatment facility will be constructed for $4,100,00 rather than $5,892,500 as set forth in the Engineer s Report, (iii) the wastewater treatment facility will be constructed for $13,001,0000 rather than $l4,001,0000 as set forth in the Engineer s Report, and (iv) the property owner of Assessment No. 3 (APN ) has petitioned the City to increase the flow allocated to its parcel from 1,118 gallons per day to 2,300 gallons per day (collectively, the Changes ); and, WHEREAS, on August 10, 2015, the City Council did, pursuant to the provisions of the Act, adopt its Resolution No to direct the Assessment Engineer to revise and modify the Engineer s Report to reflect the Changes; and, Modified Engineer ~c Report Page 10 City of Malibu Assessment District No December 9, 2015

60 WHEREAS, on October 14, 2015, the City Council did, pursuant to the provisions of the Act, adopt Resolution No continuing the Public Hearing to January 25, 2016 and ordering further changes to the Assessment Engineer s Report for the City of Malibu Assessment District No (Civic Center Wastewater Treatment Facility Phase One) to reflect the opening of construction bids on December 8, 2015; and WHEREAS, the assessments for the parcels identified herein as Assessment No. 36 and Assessment No. 37 have been reduced to zero as they were acquired by the County of Los Angeles (the County ) for purposes of road right-of-way and are anticipated to be quitclaimed by the County to the City with the condition that the property can only be used for those purposes authorized in Sections 2 and 9 of Article XIX of the California Constitution and Section 2101 of the California Streets and Highways Code thereby rendering these properties undevelopable for private purposes. NOW, THEREFORE, I, the undersigned, authorized representative of David Taussig & Associates, Inc., the duly appointed ASSESSMENT ENGINEER, pursuant to the Act, do hereby submit the following: 1. Pursuant to the provisions of law and the Resolution of Intention, I have assessed the modified costs and expenses of the works of improvements to be performed in the Assessment District upon the parcels of land in the Assessment District benefited thereby in direct proportion and relation to the estimated benefits to be received by each of said parcels. For particulars as to the identification of said parcels, reference is made to the Assessment Diagram, a copy of which is attached hereto as Exhibit D; 2. As required by law, the Assessment Diagram is hereto attached, showing the Assessment District, as well as the boundaries and dimensions of the respective parcels and subdivisions of land within said Assessment District as the same existed at the time of the passage of said Resolution of Intention, each of which subdivisions of land or parcels or lots respectively have been identified by Assessor s Parcel Number and Assessment Number upon said Assessment Diagram and in said Assessment Roll; 3. The subdivisions and parcels of land and the numbers shown on the respective Assessment Diagram as attached hereto correspond with the numbers as appearing on the Assessment Roll as contained herein as Exhibit C; 4. NOTICE IS HEREBY GIVEN that serial bonds to represent unpaid assessments, which bear interest at a fixed or variable interest rate and term of not to exceed twelve percent per annum or such higher maximum interest rate as may be permitted by law, may be issued in the manner provided in Division 10 of the Streets and Highways Code (the Improvement Bond Act of 1915) and the last installment of such bonds shall mature in not to exceed 39 years from the second of September next succeeding 12 months from their date and/or one or more contracts for loans funded by the State (the State Loans ) and secured by the assessments to be levied on property in the Assessment District may be entered Modified Engineer s Report Page 11 City of Malibu Assessment District No December 9, 2015

61 into pursuant to Section of the 1913 Act. The alternate procedure for collecting assessments and advance retirement of bonds as set forth in Part 11.1 of Division 10 of the Streets and Highways Code shall apply to these proceedings. Pursuant to Section of said Code, the City Council may determine to issue said bonds so that other than an equal annual proportion of the principal amount shall mature each year; 5. NOTICE IS HEREBY GIVEN that, pursuant to Subdivision (f) of Section of the Streets and Highways Code of the State of California, an annual assessment shall be levied on each parcel and subdivision of land within the Assessment District to pay for the necessary costs and expenses incurred, and not otherwise reimbursed, resulting from the administration and collection of assessments and from the administration or registration of any bonds and/or reserve or other related funds (the Annual Administrative Assessment ); The maximum amount of such Annual Administrative Assessment for the Assessment District shall not exceed a total of $25,000 which may increase annually at a compound rate beginning January 1, 2016, by the lesser of (i) five percent (5%), or (ii) the annualized positive change, if any, in the U.S. Consumer Price Index, All Urban Consumers, for Los Angeles Riverside Orange County, as of January 1 of each year. The Annual Administrative Assessment for each such parcel of land shall be computed based on that parcel s proportionate share of the total annual assessment (exclusive of the Annual Administrative Assessment). The Annual Administrative Assessment is in lieu of the $8.00 per assessment installment allowed by law; 6. By virtue of the authority contained in the Act and by further direction and order of the legislative body, I hereby make the following Assessment to cover the costs and expenses of the works of improvements for the Assessment District based on the costs and expenses as set forth below: Modified Engineer s Report Page 12 City of Malibu Assessment District No December 9, 2015

62 TABLE IV-1 ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) BALANCE TO ASSESSMENT I. Total Amount to Assessment $49,725, $63,688, II. Treatment Plant $19,893, $25,989, III. Collection/Distribution System $8,532, $20,0 1 2, IV. Design, Construction Management, and Engineering Services $11,291, $11,408, V. Assessment District Procedural and Formation Costs $158, $158, VI. Capitalized Interest/Construction Period Interest $5,469, $1,547, VII. Bond/Loan Reserve Fund $3,709, ~ $4,244,648.73~ VIII. Underwriting, Legal, and Professional Costs $670, $327, As preliminarily approved, capitalized interest was equal to twenty-two (22) months of estimated interest on $49,725,000 in bonds. No construction period interest was included. 2 As confirmed, capitalized interest is equal to eighteen (18) months of estimated interest on $6,790,000 in bonds. Construction period interest on the Clear Water State Revolving Fund Loans is estimated based on the anticipated construction period of eighteen (18) months. ~ As preliminarily approved, the bond reserve was equal to the estimated maximum annual debt service on $49,725,000 in bonds. ~ As confirmed, the bond reserve is equal to the estimated maximum annual debt service on $6,790,000 in bonds, and the loan reserve is equal to one-hundred and fifty percent (150%) of the estimated maximum annual debt service on $56,898, in Clear Water State Revolving Fund Loans. Modified Engineer ~s Report City of Malibu Assessment District No Page 13 December 9, 2015

63 7. The Method of Assessment is as set forth in Exhibit B, which is attached hereto, referenced and so incorporated. Dated: ~ 9,2015. David Taussig & Associates, Inc. Steve Runk R.C.E. C23473 Assessment Engineer City of Malibu State of California Modified Eizgineerts Report City of Malibu Assessment District No Page 14 December 9, 2015

64 MODIFIED ENGINEER S REPORT ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) CITY OF MALIBU PART VI REPORT UNDER PART 7.5 OF DIVISION 4 OF THE CALIFORNIA STREETS AND HIGHWAYS CODE Pursuant to the aforesaid Resolution of Intention, it has been provided that the requirements of Division 4 of the California Streets and Highways Code shall be satisfied with Part 7.5 of said Division 4. Accordingly, the following is presented: 1. The total amount, as near as can be determined, of the total principal amount of all unpaid special assessments and special assessments required or proposed to be levied under any completed or pending assessment proceedings, other than contemplated in the instant proceedings is: $10, The total true value, as near as may be determined, of the parcels of land and improvements which are proposed to be assessed in the instant proceedings, as determined by the full cash value of the parcels as shown upon the last equalized assessment roll of the County of Los Angeles is: $349,015, The total amount of the principal sum of the special assessments proposed to be levied in the instant proceedings is: $63,688, The total amount of the principal sum of unpaid special assessments levied against the parcels proposed to be assessed, as computed pursuant to paragraph 1 above, plus the principal amount of the special assessment proposed to be levied in the instant proceedings from paragraph 3 above is: $63,699, Dated: h~c~ q1 2~til5 Inc Runk R.C.E. C23473 Assessment Engineer City of Malibu State of California 7 This figure excludes the principal amount of bonds outstanding for City of Malibu CFD No, because these bonds will be paid off with Assessment District bonds and/or State Loans. Modified Engineer~ Report City of Malibu Assessment District No Page 16 December 9, 2015

65 MODIFIED ENGINEER S REPORT ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) CITY OF MALIBU STATE OF CALIFORNIA CITY OF MALIBU PART VII (A) RIGHTS-OF-WAY CERTIFICATE The undersigned hereby CERTIFIES UNDER PENALTY OF PERJURY that the following is all true and correct. At all times herein mentioned, the undersigned was, and now is, the duly appointed Director of Public Works of the City of Malibu, State of California. That proceedings have now been instituted under the provisions of the Municipal Improvement Act of 1913, being Division 12 of the Streets and Highways Code of the State of California, for the construction of certain improvements in a special Assessment District known and designated as ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) (hereinafter referred to as the Assessment District ). THE UNDERSIGNED STATES AND CERTIFIES AS FOLLOWS: All easements, rights-of-way, or land necessary for the accomplishment of improvements for the above referenced Assessment District will be in the possession of the Assessment District prior to the ordering of the works of improvements. EXECUTED this ~~day of~a~sum)( 201&, at City of Malibu, California. Director of Public Works City of Malibu State of California Modified Engineer s Report Page 17 City of Malibu Assessment District No December 9, 2015

66 MODIFIED ENGINEER S REPORT ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) CITY OF MALIBU STATE OF CALIFORNIA CITY OF MALIBU PART VII (B) CERTIFICATION OF COMPLETION OF ENVIRONMENTAL PROCEEDINGS The undersigned, under penalty of perjury, CERTIFIES as follows: 1. That I am the person authorized to prepare and process all environmental documentation as needed as it relates to the formation of the special assessment district being formed pursuant to the provisions of the Municipal Improvement Act of 1913, being Division 12 of the Streets and Highways Code of the State of California, said special assessment district known and designated as ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) (hereinafter referred to as the Assessment District ); 2. The specific environmental proceedings relating to this Assessment District that have been completed are as follows: The City has considered the effects of the proposed Improvements on the environment in accordance with the California Environmental Quality Act (Public Resources Code Section et seq.) ( CEQA ) and its implementing guidelines (14 California Code of Regulations Section et seq.) (the Guidelines ) and in accordance therewith has prepared and certified an Environmental Impact Report which was approved by the City on January 12, I do hereby certify that all environmental evaluation proceedings necessary for the formation of the Assessment District have been completed to my satisfaction, and that no further environmental proceedings are necessary. EXECUTED this 2 ~ day of J &~ ~, 20l~, at City of Malibu, California. Director of Planning City of Malibu State of California Modified Engineer ~c Report Page 18 City of Malibu Assessment District No Decein her 9, 2015

67 EXHIBIT A MODIFIED ENGINEER S REPORT ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) CITY OF MALIBU MAP OF GENERAL LOCATION AND IMPROVEMENTS

68 ~ c~.~r, L a j - - -~ ~ I t~~_.~ F t p.. c Cl) -- ~ ~ -~ c -~ -~ - I : ~ j - -~ V - p 0 2 to.. 4% C-, C) c 1 ~ ~ )f F -! ~ ~. -4-

69 EXHIBIT B MODIFIED ENGINEER S REPORT ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) CITY OF MALIBU METHOD OF ASSESSMENT A. Background Assessment District jurisprudence requires that assessments levied pursuant to the Municipal Improvement Act of 1913 be based on the special benefit properties receive from the Works of Improvement. However, the law does not specify the method or formula that should be used to apportion the assessments in Assessment District proceedings. In addition, Article XIIID of the California Constitution, added in November 1996 through the passage of Proposition 218 by voters of the State of California, requires, inter alia, that (i) only special benefits be assessable, (ii) no assessment may exceed the proportional special benefit conferred on the parcel assessed, and (iii) publicly owned parcels shall not be exempt from assessment unless clear and convincing evidence demonstrates that such publicly owned parcels receive no special benefits from the improvements for which the assessment is levied. Special benefit is a particular and distinct benefit over and above general benefits conferred on real property located in the District or to the public at 1a~ge. Importantly, the general enhancement of property value does not constitute special benefit. As such, this Engineer s Report has been designed to comply with these requirements, as well as to incorporate recent California court decisions such as: Silicon Valley Taxpayers Association, Inc. v. Santa Clara County Open Space Authority (2008), Beutz v. County of Riverside (2010), Golden Hills Neighborhood Association v. City of San Diego (2011), and Concerned Citizens v. West Point Fire Protection District (2011). Methodologically, it is necessary and essential to identify the special benefit that the Works of Improvement will render to the properties within the District. It is also necessary that the properties receive a special and direct benefit as distinguished from benefit to the general public. All costs associated with the financing of the works of improvement are to be fairly distributed among the lots and parcels within the District based upon the special benefit received by each lot and parcel. Additionally, in compliance with the California Constitution Article XIIID Section 4, each parcel s assessment may not exceed the reasonable cost of the proportional special benefit conferred upon it. In sum, each of the properties benefiting from the works of improvement proposed for Assessment District No will be assessed only for the special benefit conferred on such properties. The Assessment Engineer is appointed for the purpose of analyzing the facts and determining the method and formula for apportionment of the assessment obligation to the benefited properties. For these proceedings, the City has retained the firm of David Taussig & Associates, Inc. as the Modified Engineer~ Report Page B-i City of Malibu Assessment Distriët No i December 9, 2015

70 Assessment Engineer. The Assessment Engineer makes his or her recommendation for the method of apportionment in this Engineer s Report for consideration at the public hearing. The final authority and action rests with the City after hearing all testimony and evidence presented at the public hearing and the tabulation of the assessment ballots. Upon conclusion of the public hearing, the City must make the final action in determining that the assessment has been made in direct proportion to the special benefit received. Ballot tabulation will then be completed, and if a majority of ballots received, weighted by assessment amount, do not protest the assessment, then the City may establish the Assessment District. B. Special Benefit The special benefit conferred to each of the properties within the Assessment District is the ability to discharge wastewater flows to a centralized wastewater treatment facility in compliance with the Memorandum of Understanding Regarding Phased Implementation of Basin Plan Amendment Prohibiting On-Site Wastewater Disposal Systems in the Malibu Civic Center Area entered into by and between the City of Malibu, the Regional Water Quality Control Board, Los Angeles, and the State Water Resources Control Board (the MOU ). Resolution R adopted by the Regional Water Quality Control Board, Los Angeles Region (the Basin Plan Amendment ) prohibits on-site wastewater disposal systems in the City of Malibu Civic Center Area, and the MOU requires the construction of the works of improvements in lieu of on-site wastewater disposal systems. In addition to the wastewater treatment plant, the Assessment District will install wastewater collection and recycled water distribution facilities in existing public streets and/or public easements as shown in Exhibit A; the cost of connecting to these facilities will be borne separately by each property owner and will not be installed by the Assessment District. The Assessment District will provide each property the right to discharge up to the wastewater flow and load calculated in Section C.3 below. The works of improvements constitute the least expensive facilities with a factor of safety that can be built to serve the properties within the Assessment District. The treatment plant will be comprised of the minimum sized treatment processing units, headworks, and lab facilities as determined by the design engineer and in accordance with customary and prudent engineering design standards. Specifically, the treatment plant will consist of two (2) modules; two modules are required in order that one may be taken off line for maintenance and/or repair. The treatment plant site to be acquired is similarly the least expensive available parcel of land that is in a suitable location from an engineering standpoint. In contrast to the wastewater treatment plant, the wastewater collection and recycled water distribution lines (i.e., the diameters of certain of the collection and distribution pipes) will be constructed to accommodate wastewater flows and recycled water from properties located outside the Assessment District that are also the subject of the MOU and may be required to discharge wastewater flows off-site for treatment. The cost associated with this oversizing of the wastewater collection and recycled water distribution lines is therefore not assessed to the properties within the Assessment District. C. Apportionment Methodology The extent of the special benefit conferred to the parcels in the Assessment District is quantified in terms of wastewater flow and organic load. The cost of the wastewater collection and recycled ModWed Engineer~ Report Page B-2 City of Malibu Assessment District No December 9, 2015

71 water distribution and injection system is allocated in proportion to wastewater flow as it is the primary determinant in the design and cost of the collection and distribution facilities. The cost of the wastewater treatment plant is allocated in proportion to organic load as it is the primary determinant in the design and cost of the treatment facilities. With certain exceptions discussed in Section D below, wastewater flows and organic load for developed parcels are based on actual building square footage and uses. Wastewater flows and organic load for vacant parcels are based on (i) the maximum floor area ratio permitted by the City (0.15) and the anticipated mix of uses or (ii) development plans submitted to the City, including wastewater analyses for such development plans, if any. Standard wastewater flow rates and organic load concentrations are discussed in Sections C.1 and C.2 below. Special cases and/or exceptions are discussed in Section C.3 below. 1. Wastewater Flow Rates Non-residential wastewater flow rate assumptions are gallons per day for retail, gallons per day for restaurant, and gallons per day per building square foot for office. Wastewater flow rate assumptions for church uses are gallons per day per seat2. Wastewater flow rate assumptions for school uses are gallons per day per student and faculty/staff3. The wastewater flow rate assumption for retail use is an average and is calculated using a factor of ten ( ) gallons per day per employee, two (2.0000) gallons per day per parking space, one (1.0000) parking space per employee, and a range of building square feet per employee of 500 to 625~. The wastewater flow rate assumption for restaurant is calculated by applying a factor of nine (9.0000) gallons per day per customer5 to an existing restaurant located in the City of Malibu which averages three hundred (300) customer per day and occupies four thousand (4,000) building square feet. The wastewater flow rate assumption for office is calculated using an average of two hundred eight (208) building square feet per employee and a factor of thirteen ( ) gallons per day per employee6. Residential wastewater flow rate assumptions are 366 gallons per day for a typical singlefamily home and 700 gallons per day for large, estate-sized homes. The wastewater flow rate for the typical single family home is calculated assuming a household size, including housekeepers and visitors, of 5.2, a wastewater flow per capita of 69 gallons per day7, and a 1.02 infiltration rate. The wastewater flow rate for large, estate-sized homes is based on the proposed wastewater treatment system design prepared in connection with the development plans for Assessors Parcel Number The source for the flow rate per church seat is United States Environmental Protection Agency Publication 625/R- 00/008-Chapter 3. ~ The source for the flow rate per school seat is United States Environmental Protection Agency Publication 625/R- 00/008-Chapter 3. ~ The source for the flow rate per employee and per parking space is Design of Municipal Wastewater Treatment Plants, Fifth Edition. ~ The source for the flow rate per restaurant customer is United States Environmental Protection Agency Publication 625/R-0O/008-Chapter 3. 6 The source for the flow rate per office employee is United States Environmental Protection Agency Publication 625/R-00/008-Chapter 3. ~ The source for the flow rate per capita is United States Environmental Protection Agency Publication 625/R- 00/008-Chapter 3. Modified Engineer s Report Page B-3 City of Malibu Assessment District No December 9, 2015

72 2. Organic Load Concentration Organic load concentration, a measure of the strength of the wastewater to be treated, is used to design the treatment process. Residential organic load concentrations are estimated to be 313 milligrams per liter ( mg/l ) using per capita BOD loads from EPA guidelines8. Non-residential organic load concentrations were estimated to be similar to residential concentrations at 313 mg/l for retail, office, school, and church uses. For restaurants the BOD concentration was estimated to be 544 mg/l based on wastewater sampling conducted at shopping centers within the Civic Center area of the City. Total organic load is expressed in pounds per day and is calculated using the following formula: wastewater flow x organic load concentration x / i,000,000~. The specific wastewater flow and treatment plant load calculations for each parcel are discussed in Section C.3 below. 3. Wastewater Flow and Load Calculations The wastewater flow and load estimates are summarized below. The terms BSF, GPD and PPD mean, respectively, building square feet, gallons per day and pounds per day (Assessment No. 1) This is land with certain existing structures located at 3730 Cross Creek Road. The property is zoned Commercial Visitor Serving I. Total future building area is estimated at 11,801 square feet using an FAR of 0.15 (78,670 parcel square feet x 0.15). The City indicates that the property has the potential to include retail and restaurant uses and therefore, wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or 1, GPD (11,801 x 0.8 x GPD/BSF (Retail) + 11,801 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) + 1, GPD x 544 (Restaurant)) x / 1,000,000) (Assessment No. 2) This is a Shell service station located at Pacific Coast Highway and occupies the northeast corner of Pacific Coast Highway and Cross Creek Road. The property is zoned Commercial Visitor Serving I. Total existing building area is 1,731 square feet. While there are no existing restaurant or other wet uses, the City indicates that there is the potential for restaurant/food service use(s) in the future. Therefore, wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or GPD (1,731 x 0.8 x GPD/BSF (Retail) + 1,731 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) GPD x 544 (Restaurant)) x / 1,000,000). ~ The source for the BOD load per capita is United States Environmental Protection Agency Publication 625/R- 00/008-Chapter 3. ~ The source for the equation for total organic load is Design of Municipal Wastewater Treatment Plants, Fifth Edition. Modified Engineer s Report Page B..4 City of Malibu Assessment District No December 9, 2015

73 (Assessment No. 3) This is a commercial development with office, retail, and storage uses located on the east side of Cross Creek Road near the intersection of Cross Creek Road and Civic Center Way (3806 Cross Creek Road). The property is zoned Commercial Visitor Serving I. The City anticipates that this property will tend toward higher intensity uses following completion of the works of improvements, and the property owner has petitioned the City to increase the estimated wastewater flow to 2,300 GPD to accommodate future restaurant use. Estimated wastewater flow of 2,300 GPD would accommodate 1,930 square feet of restaurant and 15,967 square feet of office; no retail use is assumed because of the City s expectation that the property will tend toward higher intensity uses. Total building area is 17,897 square feet based on the November 26, 2013 site plan for The Courtyard development. Total estimated wastewater flow is 2, GPD (1,930 x GPD/BSF (Restaurant) + 15,967 x GPD/BSF (Office)). Estimated organic load is PPD ((1, GPD x 544 (Restaurant) GPD x 313 (Office)) x / 1,000,000) (Assessment No. 4) This is vacant land located north of Pacific Coast Highway just west of Malibu Lagoon. The property is zoned Commercial Visitor Serving I. Total future building area is estimated at 15,968 square feet using an FAR of 0.15 (106,450 total parcel square feet x 0.15). The City indicates that the property has the potential to include retail and restaurant uses, and therefore wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or 2, GPD (15,968 x 0.8 x GPD/BSF (Retail) + 15,968 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) + 2, GPD x 544 (Restaurant)) x / 1,000,000) (Assessment No. 5) This is a commercial development located at 3728 Cross Creek Road. The property is zoned Commercial Visitor Serving I. Actual building square footage data are not available. Therefore, building area is estimated at 4,494 using an FAR of 0.15 (29,960 parcel square feet x 0.15). The City indicates that there is the potential for restaurant and/or other wet use(s) in the future, and therefore wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or GPD (4,494 x 0.8 x GPD/BSF (Retail) + 4,494 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) GPD x 544 (Restaurant)) x / 1,000,000) (Assessment No. 6) This is a restaurant, retail, and office development located at 3900 Cross Creek Road. The property is zoned Commercial Visitor Serving I. Total building area is 13,061 square feet (4,686 square feet of retail, 5,245 square feet of restaurant, and 3,130 square feet of office). Total estimated wastewater flow is 3, Modified Eizgineer ~c Report Page B-S City of Malibu Assessment District No December 9, 2015

74 GPD (4,686 x GPD/BSF (Retail) + 5,245 x GPD/BSF (Restaurant) + 3,130 x GPD/BSF (Office)). Estimated organic load is PPD (( GPD x 313 (Retail) + 3, GPD x 544 (Restaurant) GPD x 313 (Office)) x /1,000,000) (Assessment No. 7) and (Assessment No. 8) These parcels comprise the Malibu Creek/Malibu Village development located on Cross Creek Road ( Cross Creek Road) and Pacific Coast Highway ( Pacific Coast Highway). The properties are zoned Commercial Visitor Serving I. Total building area for is 25,832 square feet (23,332 square feet of retail and 2,500 square feet of restaurant). Total estimated wastewater flow for is 2, GPD (23,332 x GPD/BSF (Retail) + 2,500 x GPD/BSF (Restaurant)). Estimated organic load for is PPD (( GPD x 313 (Retail) + 1, GPD x 544 (Restaurant)) x / 1,000,000). Total building area for is 25,990 square feet (21,150 square feet of retail and 4,840 square feet of restaurant). Total estimated wastewater flow for is 3, GPD (21,150 x GPD/BSF (Retail) + 4,840 x GPD/BSF (Restaurant)). Estimated organic load for is PPD (( GPD x 313 (Retail) + 3, GPD x 544 (Restaurant)) x / 1,000,000) (Assessment No. 9) This is an unmanned Southern California Edison facility located at 3808 Cross Creek Road. The property is zoned Commercial Visitor Serving I. Actual building square footage data are not available. Therefore, building area is estimated at 2,875 using an FAR of 0.15 (19,166 parcel square feet x 0.15). The City indicates that there is the potential for redevelopment of the property for nonutility use in the future, and therefore wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or GPD (2,875 x 0.8 x GPD/BSF (Retail) + 2,875 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) GPD x 544 (Restaurant)) x / 1,000,000) (Assessment No. 10) This is vacant land located at 3738 Cross Creek Road, north of The property is zoned Commercial General. Total future building area is estimated at 34,042 square feet using an FAR of 0.15 (226,948 parcel square feet x 0.15). The City indicates that the property has the potential to include retail and restaurant uses, and therefore, wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or 5, GPD (34,042 x 0.8 x GPD/BSF (Retail) + 34,042 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) + 4, GPD x 544 (Restaurant)) x / 1,000,000). Modified Engineer s Report Page B-6 City of Malibu Assessment District No December 9, 2015

75 (Assessment No. 11) This is a parking lot that serves the development located on (Assessment No. 13). Therefore flow and load is zero and there will be no assessment. The property is zoned Commercial General (Assessment No. 12) This is an office development located at Malibu Road. Total building area is 3,224 square feet. The property is zoned Commercial General. There are no existing restaurant or other wet uses, and the City does not anticipate any in the future. Estimated wastewater flow is GPD (3,224 x GPD/BSF). Estimated organic load is PPD (( GPD x 313) x / 1,000,000) (Assessment No. 13) This is an office development located along Malibu Road ( Malibu Road). The property is zoned Commercial General. Total building area is 12,050 square feet. There are no existing restaurant or other wet uses, and the City does not anticipate any in the future. Estimated wastewater flow is GPD (12,050 x GPD/BSF). Estimated organic load is PPD (( GPD x 313) x /1,000,000) (Assessment No. 14) This property is Los Angeles County Fire Station #88 and is located at Malibu Road. The property is zoned Commercial General. The number of fire fighters housed at the fire station is comparable to the household size for a typical single family home, and therefore wastewater flow is estimated at 366 GPD. Estimated organic load is PPD (( GPD x 313) x / 1,000,000) (Assessment No. 15), (Assessment No. 16), and (Assessment No. 17) This is vacant land located approximately at the southeast corner of Pacific Coast Highway and Malibu Canyon Road. The property is zoned Planned Development. Estimated wastewater flow is based on plans for the development of five (5) large, estate sized residential dwelling units plus a gatehouse and equals 3, GPD (5 DUs x 700 GPD/DU + 60 GPD for the gatehouse). Estimated organic load is PPD ((3, GPD x GPD x 313) x / 1,000,000). All dwelling units are anticipated to be located on Modified Engineer ~c Report Page B-7 City of Malibu Assessment District No December 9, 2015

76 (Assessment No. 18), (Assessment No. 19), (Assessment No. 20), (Assessment No. 21), (Assessment No. 22), (Assessment No. 23), and (Assessment No. 24) This is vacant land located south of Pacific Coast Highway and east of The property is zoned Single Family Medium. Estimated wastewater flow is based on plans for the development of four (4) large, estate sized residential dwelling units plus an unmanned gatehouse. Estimated wastewater flow for each residential parcel is 700 GPD. Estimated organic load for each residential parcel is PPD (( GPD x 313) x / 1,000,000). The residential parcels are , , , and The unmanned gatehouse will be located on and are open space, non-buildable lots (Assessment No. 25) The property is zoned Public Open Space. This is the entrance to Bluffs Park and therefore will produce no wastewater flow. There will be no assessment (Assessment No. 26) This is Bluffs Park. The property is zoned Public Open Space. Estimated wastewater flow is attributable to the public restroom facilities which are projected to generate 220 GPD. Estimated organic load is PPD (( GPD x 313) x / 1,000,000) (Assessment No. 27) This is vacant land located south of the intersection of Pacific Coast Highway and Civic Center Way and north of Malibu Road. The property is zoned Single Family Medium. Estimated wastewater flow is based on plans for the development of one (1) large, estate sized residential dwelling unit and equals 700 GPD. Estimated organic load is PPD (( GPD x 313) x / 1,000,000) (Assessment No. 28) This is vacant land located at Pacific Coast Highway, at the merger of Pacific Coast Highway and Malibu Road. The property is zoned Commercial General. Total future building area is estimated at 3,511 square feet using an FAR of 0.15 (23,409 total parcel square feet x 0.15). The City indicates that the property has the potential to include retail and restaurant uses, and therefore wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or GPD (3,511 x 0.8 x GPD/BSF (Retail) + 3,511 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) GPD x 544 (Restaurant)) x / 1,000,000). Modified Eizgineer ~c Report Page B-8 City of Malibu Assessment District No December 9, 2015

77 (Assessment No. 29) This is a commercial development located at Pacific Coast Highway, on the southeast corner of the intersection of Pacific Coast Highway and Webb Way. The property is zoned Commercial General. Total building area is 8,434 square feet. While there are no existing restaurant or other wet uses, the City indicates that there is the potential for restaurant/food service use(s) in the future. Therefore, wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or 1, GPD (8,434 x 0.8 x GPD/BSF (Retail) + 8,434 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) + 1, GPD x 544 (Restaurant)) x /1,000,000) (Assessment No. 30) This is the Malibu Colony Plaza development located at Malibu Road. The property is zoned Commercial General. Total building area is 116,925 square feet (68,014 square feet of retail and 48,911 square feet of restaurant). Total estimated wastewater flow is 34, GPD (68,014 x GPD/BSF (Retail) + 48,911 x GPD/BSF (Restaurant)). Estimated organic load is PPD ((1, GPD x 313 (Retail) + 33, GPD x 544 (Restaurant)) x / 1,000,000) (Assessment No. 31) This is an office development located at Pacific Coast Highway. The property is zoned Commercial Visitor Serving I. Total building area is 2,386 square feet (284 square feet of retail and 2,102 square feet of office). Total estimated wastewater flow is GPD (284 x GPD/BSF (Retail) + 2,102 x GPD/BSF (Office)). Estimated organic load is PPD (( GPD x 313 (Retail) GPD x 313 (Office)) x / 1,000,000) (Assessment No. 32) This is the Malibu Professional Arts office development located at Civic Center Way. The property is zoned Commercial Visitor Serving I. Total building area is 12,644 square feet. Estimated wastewater flow is GPD (12,644 x GPD/BSF). Estimated organic load is PPD (( GPD x 313) x / 1,000,000) (Assessment No. 33) This is the Malibu Country Mart II development located at Civic Center Way. The property is zoned Commercial Visitor Serving I. Total building area is 39,076 square feet (19,996 square feet of retail, 4,700 square feet of restaurant, and 14,380 square feet of office). Estimated wastewater flow is 4, GPD (19,996 x GPD/BSF (Retail) + 4,700 x GPD/BSF (Restaurant) + 14,380 x GPD/BSF (Office)). Estimated organic load is PPD (( GPD x 313 (Retail) + 3, GPD x 544 (Restaurant) GPD x 313 (Office)) x / 1,000,000). Modified Engineer ~c Report Page B-9 City of Malibu Assessment District No December 9, 2015

78 (Assessment No. 34) This is the Malibu Country Mart I development located at 3835 Cross Creek Road. The property is zoned Commercial Visitor Serving I. Total building area is 29,068 square feet (19,737 square feet of retail, 8,025 square feet of restaurant, and 1,306 square feet of office). Total estimated wastewater flow is 5, GPD (19,737 x GPD/BSF (Retail) + 8,025 x GPD/BSF (Restaurant) + 1,306 x GPD/BSF (Office)). Estimated organic load is PPD (( GPD x 313 (Retail) + 5, GPD x 544 (Restaurant) GPD x 313 (Office)) x /1,000,000) (Assessment No. 35) This parcel of vacant land is located south of Civic Center Way, north of Pacific Coast Highway, and west of Webb Way. The property is zoned Commercial General. Total future building area for is estimated at 7,242 square feet using an FAR of 0.15 (48,280 total parcel square feet x 0.15). The City indicates that the property has the potential to include retail and restaurant uses, and therefore wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or 1, GPD (7,242 x 0.8 x GPD/BSF (Retail) + 7,242 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) GPD x 544 (Restaurant)) x / 1,000,000) (Assessment No. 36) and (Assessment No. 37) Assessment No. 36 is a parcel of vacant land located south of Civic Center Way, north of Pacific Coast Highway, and west of Webb Way. Assessment No. 37 is vacant land located at the northeast corner of the intersection of Webb Way and Pacific Coast Highway. These two parcels were acquired by the County of Los Angeles for purposes of road right-of-way, and are anticipated to be quitclaimed to the City with the condition that the property can only be used for those purposes authorized in Sections 2 and 9 of Article XIX of the California Constitution and Section 2101 of the California Streets and Highways Code which renders these properties undevelopable for private purposes. Therefore, flow and load is zero and there will be no assessment. Modified Engineer s Report Page B-JO City of Malibu Assessment District No December 9, 2015

79 (Assessment No. 38) This is part of Legacy Park. The property is zoned Commercial Visitor Serving I and will have no restroom or other facilities which would discharge to the wastewater treatment system. Therefore, estimated wastewater flow organic load are zero (0) and there will be no assessment (Assessment No. 39) This is a commercial development that includes the Lumber Yard (3939 Cross Creek Road), Super Care building (23661 and Pacific Coast Highway), and animal hospital facilities (23431 Pacific Coast Highway). The property is zoned Commercial Visitor Serving I. Total building area is 37,862 square feet (30,049 square feet of retail, 6,605 square feet of restaurant, and 1,208 square feet of office). Total estimated wastewater flow is 5, GPD (30,049 x GPD/BSF (Retail) + 6,605 x GPD/BSF (Restaurant) + 1,208 x GPD/BSF (Office)). Estimated organic load is PPD (( GPD x 313 (Retail) + 4, GPD x 544 (Restaurant) GPD x 313 (Office)) x /1,000,000) (Assessment No. 40) This is an office development located adjacent and south of Malibu City Hall ( Stuart Ranch Road). The property is zoned Community Commercial. Total building area is 40,528 square feet. Estimated wastewater flow is 2, GPD (40,528 x GPDIBSF). Estimated organic load is PPD ((2, GPD x 313) x / 1,000,000) (Assessment No. 41) This is vacant land located at the northwest corner of Civic Center Way and Stuart Ranch Road. The property is zoned Community Commercial. Total future building area is estimated at 44,105 square feet using an FAR of 0.15 (294,030 total parcel square feet x 0.15). The City indicates that the property has the potential to include retail and restaurant uses, and therefore wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or 6, GPD (44,105 x 0.8 x GPD/BSF (Retail) + 44,105 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) + 5, GPD x 544 (Restaurant)) x / 1,000,000) (Assessment No. 42) This property is Malibu City Hall. The property is zoned Community Commercial. Total building area is 37,359 square feet. Estimated wastewater flow is 2, GPD (37,359 x GPD/BSF). Estimated organic load is PPD ((2, GPD x 313) x / 1,000,000). ModWed Engineer s Report Page B-fl City of Malibu Assessment District No December 9, 2015

80 (Assessment No. 43) This is vacant land located at the northwest corner of the Civic Center Way and Cross Creek Road. The property is zoned Commercial Visitor Serving I. Along with , this property is proposed to be developed as a Whole Foods Store. Total future building area is 38,425 square feet (9,222 square feet of retail and 29,203 square feet of restaurant). Total estimated wastewater flow is 9,340 GPD and is based on a September 2, 2011 study prepared EPD Consultants, which estimates that 710 GPD is attributable to the retail use and the remaining 8,630 GPD is attributable to the restaurant use. The wastewater flow from each land use is split between Assessor s Parcels and proportionately on the basis of land area. Estimated wastewater flow for Assessor s Parcel , based on its parcel square footage of 108,464 and the total parcel square footage for both parcels of 259,673, is 3, GPD (710 GPD x 108,464 / 259,673 (Retail) + 8,630 GPD x 108,464 I 259,673 (Restaurant)). Estimated organic load for Assessor s Parcel is PPD (( GPD x 313 (Retail) + 3, GPD x 544 (Restaurant)) x / 1,000,000) (Assessment No. 44) This is vacant land located at the northeast corner of Civic Center Way and Stuart Ranch Road. The property is zoned Community Commercial. Total future building area is estimated at 81,010 based on an August 2013 traffic study for a proposed development comprised of retail, restaurant, and office uses (38,567 square feet of retail, 15,000 square feet of restaurant, and 27,443 square feet of office). Total estimated wastewater flow is 12, GPD (38,567 x GPD/BSF (Retail) + 15,000 x GPDIBSF (Restaurant) + 27,443 x GPDIBSF (Office)). Estimated organic load is PPD (( GPD x 313 (Retail) + 10, GPD x 544 (Restaurant) + 1, GPD x 313 (Office)) x / 1,000,000) (Assessment No. 45) This is vacant land located on the east side of Stuart Ranch Road opposite of Malibu City Hall. The property is zoned Community Commercial. Total future building area is estimated at 42,079 using an FAR of 0.15 (280,526 parcel square feet x 0.15). The City indicates that the property has the potential to include retail and restaurant uses, and therefore wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or 6, GPD (42,079 x 0.8 x GPDIBSF (Retail) + 42,079 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) + 5, GPD x 544 (Restaurant)) x 8.345/1,000,000). Modified Engineer s Report Page B-12 City of Malibu Assessment District No December 9, 2015

81 (Assessment No. 46) This is vacant land located on the west side of La Paz Lane at its current terminus. The property is zoned Community Commercial. Total future building area is estimated at 55,408 using an FAR of 0.15 (369,389 parcel square feet x 0.15). The City indicates that the property has the potential to include retail and restaurant uses, and therefore wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or 8, GPD (55,408 x 0.8 x GPD/BSF (Retail) + 55,408 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) + 7, GPD x 544 (Restaurant)) x / 1,000,000) (Assessment No. 47) This is vacant land located approximately at the northwest corner of the Civic Center Way and Cross Creek Road. The property is zoned Commercial Visitor Serving I. Along with , this property is proposed to be developed as a Whole Foods Store. Total estimated wastewater flow is 9,340 GPD and is based on a September 2, 2011 study prepared EPD Consultants, which estimates that 710 GPD is attributable to the retail use and 8,630 GPD is attributable to the restaurant use. The wastewater flow from each land use is split between Assessor s Parcels and proportionately on the basis of land area. Estimated wastewater flow for Assessor s Parcel , based on its parcel square footage of 151,209 and the total parcel square footage for both parcels of 259,673, is 5, GPD (710 GPD x 151,209 / 259,673 (Retail) + 8,630 GPD x 151,209 I 259,673 (Restaurant)). Estimated organic load for Assessor s Parcel is PPD (( GPD x 313 (Retail) + 5, GPD x 544 (Restaurant)) x /1,000,000) (Assessment No. 48) and (Assessment No. 49) This is vacant land located east of La Paz Lane and north of Civic Center Way. Development assumptions are based on a February 26, 2008 site plan. The property is zoned Town Center Overlay. Total future building area for is 88,997 (43,917 square feet of retail, 10,000 square feet of restaurant, and 35,080 square feet of office). Estimated wastewater flow for is 9, GPD (43,917 x GPD/BSF (Retail) + 10,000 x GPDIBSF (Restaurant) + 35,080 x GPD/BSF (Office)). Estimated organic load is PPD (( GPD x 313 (Retail) + 6, GPD x 544 (Restaurant) + 2, GPD x 313 (Office)) x / 1,000,000). Total future building area for is 43,061 square feet of restaurant, (15,585 square feet of retail, and 27,476 square feet of office). Estimated wastewater flow for is 2, GPD (15,585 x GPD/BSF (Retail) + 27,476 x GPD/BSF (Office)). Estimated organic load is PPD (( GPD x 313 (Retail) + 1, GPD x 313 (Office)) x / 1,000,000). Modified Engineer s Report Page B-13 City of Malibu Assessment District No December 9, 2015

82 o (Assessment No. 50) This is vacant land located on north of the The property is zoned Community Commercial. Total future building area is estimated at 23,509 using an FAR of 0.15 (156,728 parcel square feet x 0.15). The City indicates that the property has the potential for office uses. Estimated wastewater flow is 1, GPD (23,509 x GPD/BSF). Estimated organic load is PPD ((1, GPD x 313) x / 1,000,000) (Assessment No. 51) This is a GTE California, Inc. facility along Cross Creek Road. The property is zoned Commercial Visitor Serving I. Actual building square footage data are not available. Therefore, building area is estimated at 5,138 using an FAR of 0.15, the maximum permitted under current City zoning regulations (34,250 parcel square feet x 0.15). The City indicates that there is the potential for redevelopment of the property for non-utility use in the future, and therefore wastewater flow is estimated assuming eighty percent (80%) retail and twenty percent (20%) restaurant use, or GPD (5,138 x 0.8 x GPD/BSF (Retail) + 5,138 x 0.2 x GPD/BSF (Restaurant)). Estimated organic load is PPD (( GPD x 313 (Retail) GPD x 544 (Restaurant)) x / 1,000,000) (Assessment No. 52) This property is located at Civic Center Way and currently houses Los Angeles County courthouse, sheriff substation, library, and Water Works District 29 facilities and an unmanned communications tower. The property is zoned Institutional. A new Santa Monica Community College District satellite campus (no restaurant or cafeteria are anticipated) and Los Angeles County Sheriff substation facility will be constructed, replacing the existing sheriff substation. Total building square footage will be 86,900. The new SMCCD campus will be 27,500 building square feet with a total of two hundred ten (210) full time equivalent students and twelve (12) faculty/staff. The new Sheriff substation will be 5,640 building square feet. The existing courthouse facility is 24,240 building square feet. The existing library is 16,229 square feet. The Water Works District 29 offices are 12,291 building square feet. In addition, there is 1,000 square feet of storage. Estimated wastewater flow is 6, GPD (59,400 x GPDIBSF (Office) x 11 GPD). Estimated organic load is PPD ((3, GPD x 313 (Office) + 2, GPD x 313 (College)) x / 1,000,000). ModWed Engineer~ Report Page B-14 City of Malibu Assessment District No December 9, 2015

83 (Assessment No. 53), (Assessment No. 54), and (Assessment No. 55) This is Our Lady of Malibu Church and School. The property is zoned Institutional. The school is located on , the church is located on , and the rectory is located on The church has seating for 250. The school has a student capacity of one hundred twenty-three (123) with faculty and staff of up to twenty (20). Estimated wastewater flow for is 1, GPD (143 x 11 GPD). Estimated organic load for is PPD ((1, GPD x 313) x / 1,000,000). Estimated wastewater flow for is GPD (250 seats x 3 GPD/seat). Estimated organic load for is PPD (( GPD x 313) x /1,000,000). Estimated wastewater flow for is 366 GPD. Estimated organic load for is PPD (( GPD x 313) x / 1,000,000) (Assessment No. 56) and (Assessment No. 57) These two properties comprise the wastewater treatment plant site. The properties are zoned Commercial Visitor Serving II. Estimated wastewater flow is 100 GPD and is based on one bathroom, laboratory sink, and a dishwasher. Estimated organic load is PPD (100 x 313 x / 1,000,000). Wastewater flow and load are allocated to each parcel in proportion to land area. Estimated wastewater flow for Assessor s Parcel is 27 GPD (100 x parcel square footage of 30,930 divided by the total parcel square footage for both parcels of 113,400). Estimated wastewater flow for Assessor s Parcel is 73 GPD (100 x parcel square footage of 82,470 divided by the total parcel square footage for both parcels of 113,400). Estimated organic load for Assessor s Parcel is PPD (( GPD x 313) x / ). Estimated organic load for Assessor s Parcel is PPD (( GPD x 313) * / 1,000,000). D. Parcel Subdivisions and Consolidations If an Assessor s Parcel is subdivided, the assessment for the subdivided parcel shall be apportioned to the new parcels in accordance with the preceding assessment methodology. The sum of the assessments for the new parcels shall equal the assessment for the subdivided parcel. If two or more Assessor s Parcels are consolidated, the assessment for the parcel resulting from such consolidation shall be equal to the sum of the assessments for the consolidated parcels. Modified Engineer ~c Report Page B-iS City of Malibu Assessment District No December 9, 2015

84 In conclusion, it is my opinion that the assessments for the above-referenced Assessment District have been spread in accordance with the direct and special benefits that each parcel receives from the works of improvement. Dated: Q, David T ussig & Associates, Inc. j, I_i s ct Po ~ St~ve Runk R.C.E. C23473 Assessment Engineer City of Malibu I State of California ~-, as CITY ~ilekk~ofihe City of Malibu, CALIFORNIA do hereby certify that the foregoin~ Assessment, together with the Diagram attached thereto, was recorded in my office on the A.~5Th day of City Clerk City of Malibu State of California i, Li ~ ~b ~, as CITY CLERK of the City of Malibu, CALIFORNIA do hereby certify that the foi~egoing Assessment, together with the Diagram attached thereto, was approved and confirmed by the City Council of said City on the day of Janu4~ ~2~20l6. C~ty Clerk City of Malibu State of California I, V~4~i~ Y&A.ê~1~, as DIRECTOR OF PUBLIC WORKS of the City of Malibu, CALIFORNIA do hereby certify that the foregoing Assessment, together with Diagram attached thereto, was recorded in my office on the day of~~3~ 2~5, Director of Public Works City of Malibu State of California Modified Engineer~ Report Page B-16 City of Malibu Assessment District No December 9, 2015

85 EXHIBIT C MODIFIED ENGINEER S REPORT ASSESSMENT DISTRICT NO (CIVIC CENTER WASTEWATER TREATMENT FACILITY - PHASE 1) CITY OF MALIBU ASSESSMENT ROLL

86 Mariposa Land Company Ltd First Oaks Oil LLC Cross Creek Road LLC Mariposa Land Company Ltd Mariposa Land Company Ltd Cross Creek LLC Jamestown Premier Malibu Village LP Jamestown Premier Malibu Village LP So Calif Edison Co, SB of E Par 1 Map A Mariposa Land Co Ltd And Malibu Rd LLC Morton M And Leslie Gerson Trs, Gerson Family Trust And Malibu Rd LLC LA County Consolidated Fire Pro Dist PCH Project Owner LLC PCH Project Owner LLC PCH Project Owner LLC Malibu Rd Project Owner LLC Malibu Rd Project Owner LLC Malibu Rd Project Owner LLC Malibu Rd Project Owner LLC Malibu Rd Project Owner LLC Malibu Rd Project Owner LLC Malibu Rd Project Owner LLC Malibu City Malibu City Reco Land Corp Chevron Usa Inc KW Partnership LP And KW Two Partnership LP KW Malibu Colony LLC Cross Creek Real Estate Group LLC And Malibu Bear LLC CCW Partners LLC Malibu Cross Creek Ltd Cross Creek LLC Reco Land Corp LA County PROPOSED CITY OF MALIBU ASSESSMENT DISTRICT NO (CIVIC CENTER PHASE I WASTEWATER TREATMENT FACILITY) ASSESSMENT ROLL Construction Soft Costs, Treatment Plant Collection/Distribution Total Construction Hard District Formation Costs, Total Assessment as Total Assessment as Assessor s Construction Costs System Construction Costs Costs and Bond Issuance Costs Preliminarily Approved Confirmed Assessment Parcel Parcel Percent Parcel Percent Parcel Percent Parcel Percent Parcel Percent Parcel Percent Number Number Property Owner Assessment of Total Assessment of Total Assessment of Total Assessment of Total Assessment of Total Assessment of Total $321, $47, $352, $434, $122, $696, $229, % $163, % $393, % $14, % $17, % $85, $739, $1,071, $197, $ % 0.18% 1.36% 1.67% 0.47% 2.68% $229, % $550, % $33, % $80, % $293, % $645, % $309, % $744, % $87, % $209, % $489, % $1,185, % $371, % $279, % $650, % $662, % $474, % $1,137, % $78, % $55, % $134, % $926, % $660, % $1,587, % $ % $ % $ % $21, % $25, % $47, % $81, % $96, % $177, % $39, % $46, % $0.00 $0.00 $384, $75, $75, $75, $75, $0.00 $0.00 $0.00 $0.00 $23, $75, $95, % 0.00% 1.48% 0.29% 0.29% 0.29% 0.29% 0.00% 0.00% 0.00% 0.00% 0.09% 0.29% 0.37% $ % $ % $453, % $89, % $89, % $89, % $89, % $ % $ % $ % $ % $28, % $89, % $68, % $86, % $ % $ % $838, % $164, % $164, % $164, % $164, % $ % $ % $ % $ % $51, % $164, % $163, % $32, % $211, % $548, % $31, % $80, % $248, % $275, % $286, % $742, % $80, % $208, % $455, % $1,267, % $250, % $601, % $437, % $1,122, % $51, % $133, % $610, % $1,581, % $ % $ % $18, % $49, % $68, % $185, % $33, % $ % $ % $322, % $63, % $63, % $63, % $63, % $ % $ % $ % $ % $19, % $63, % $62, % $90, % $ % $ % $876, % $172, % $172, % $172, % $172, % $ % $ % $ % $ % $54, % $172, % $163, % $151, % $391, % $761, % $111, % $893, % $1,030, % $290, % $1,641, % $900, % $1,574, % $185, % $2,197, % $ % $65, % $245, % $119, % $ % $ % $1,160, % $228, % $228, % $228, % $228, % $ % $ % $ % $ % $71, % $228, % $226, % $544, % $6,356, % $4,396, % $10,752, % $4,134, % $12,749, % $14,886, % $12, % $32, % $44, % 0.33% $100, % $186, % $71, % $194, % $257, % 2.84% $574, % $1,313, % $504, % $1,398, % $1,818, % 4.12% $755, % $1,827, % $702, % $1,941, % $2,529, % 0.76% $140, % $337, % $129, % $336, % $467, % 0.00% $ % $ % $ % $146, % $ % Page lof 2