NEW ISSUE - BOOK-ENTRY ONLY

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1 NEW ISSUE - BOOK-ENTRY ONLY NOT RATED In the opinion of Bond Counsel, under existing statutes, regulations, rulings and court decisions, and assuming compliance with the tax covenants described herein, interest on the 2006A Bonds is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on certain corporations. Such interest, however, will be included in the calculation of a corporation s alternative minimum taxable income. See TAX MATTERS herein regarding certain other tax considerations. Dated: November 1, 2006 $33,840,000 CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT (City of Clearwater, Florida) Capital Improvement Revenue Bonds, Series 2006A Due Date: As set forth below The $33,840,000 Clearwater Cay Community Development District (City of Clearwater, Florida) Capital Improvement Revenue Bonds, Series 2006A (the 2006A Bonds ) are being issued by the Clearwater Cay Community Development District (the District ) which is located in the City of Clearwater, Florida (the City ), only in fully registered form, in denominations of $5,000, provided, however, that the 2006A Bonds will be deliverable to the initial purchasers only in denominations of $100,000 or integral multiples of $5,000 in excess of $100,000. The District is a local unit of special purpose government of the State of Florida (the State ), established under and pursuant to the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended (the Act ). The District was established pursuant to the Act, Ordinance No enacted by the City Commission of the City on September 15, 2005, which became effective September 23, 2005; as amended, Resolution No adopted by the Board of Supervisors of the District (the Board ) on November 28, 2005, as supplemented by Resolution No adopted by the Board on October 17, 2006 (collectively, the Resolution ), and a Master Trust Indenture dated as of December 1, 2005 (the Master Indenture ), between the District and U.S. Bank National Association, a national banking association, as successor in trust to the corporate trusts of Wachovia Bank, National Association, as trustee (the Trustee ) as supplemented by the Second Supplemental Trust Indenture dated as of November 1, 2006 between the District and the Trustee (the Second Supplemental Indenture, and together with the Master Indenture, the Indenture ). Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Indenture. The 2006A Bonds, when issued, will be registered in the name of Cede & Co., as the registered owner and the nominee for The Depository Trust Company ( DTC ), New York, New York. Purchases of beneficial interests in the 2006A Bonds will be made in book-entry only form. Accordingly, principal of and interest on the 2006A Bonds will be paid from the sources provided below by the Trustee directly to Cede & Co. as the nominee of DTC and the registered owner thereof. Disbursement of such payments to the DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants and the Indirect Participants, as more fully described herein. Any purchaser as a beneficial owner of a 2006A Bond must maintain an account with a broker or dealer, who is or acts through a DTC Participant, to receive payment of the principal of and interest on such 2006A Bond. See DESCRIPTION OF THE 2006A BONDS - Book-Entry Only System herein. The 2006A Bonds will bear interest at the fixed rate set forth herein, calculated on the basis of a 360-day year comprised of twelve 30-day months. Interest on the 2006A Bonds is payable semi-annually on each May 1 and November 1, commencing May 1, The 2006A Bonds are subject to optional redemption, mandatory redemption and extraordinary mandatory redemption at the times, in the amounts and at the redemption prices as more fully described herein. See DESCRIPTION OF THE 2006A BONDS - Redemption Provisions set forth in this Limited Offering Memorandum. The 2006A Bonds are the second series of securities to be issued by the District and are being issued to: (i) pay, together with other legally available funds of the District, all amounts due and owing under the District s $30,650,000 Bond Anticipation Notes, Series 2005, the entire aggregate principal amount of which is currently outstanding (the 2005 Notes ) in full satisfaction thereof; (ii) pay capitalized interest on the 2006A Bonds; (iii) fund the 2006 Reserve Account established for the 2006A Bonds; and (iv) pay certain costs associated with the issuance of the 2006A Bonds. The 2006A Bonds are equally and ratably secured by the 2006 Trust Estate, without preference or priority of one 2006A Bond over another. The District has covenanted not to issue or incur any obligations payable from the proceeds of the 2006 Assessments nor voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or other charge upon such 2006 Assessments other than the lien of any Subordinate Debt and except for fees, commissions, costs, and other charges payable to the Property Appraiser or to the Tax Collector pursuant to the laws of the State. The District or other governmental entities may, however, impose and levy assessments or ad valorem taxes payable on a parity with the 2006 Assessments securing the 2006A Bonds. The 2006A Bonds are limited obligations of the District issued under the provisions of the Act and the Indenture and do not constitute an indebtedness of the State or the City, but are payable solely from the 2006 Pledged Revenues and moneys on deposit in the 2006 Pledged Funds and Accounts under the terms and provisions of the Indenture and the District is not obligated to pay the 2006A Bonds except from such funds. The issuance of the 2006A Bonds shall not directly, indirectly or contingently obligate the District or the City to levy or to pledge any other funds whatsoever therefor or to make any appropriation for their payment. As referenced above, the 2006A Bonds are not obligations or indebtedness of the State or any agency, authority, district or political subdivision of the State, including the City, other than the District. NO APPLICATION HAS BEEN MADE FOR A RATING WITH RESPECT TO THE 2006A BONDS. PURSUANT TO APPLICABLE STATE LAW, THE UNDERWRITER IS LIMITING THIS INITIAL OFFERING OF THE 2006A BONDS TO ONLY ACCREDITED INVESTORS WITHIN THE MEANING OF THE RULES OF THE FLORIDA DEPARTMENT OF FINANCIAL SERVICES. THE LIMITATION OF THE INITIAL OFFERING TO ACCREDITED INVESTORS DOES NOT DENOTE RESTRICTIONS ON TRANSFER IN ANY SECONDARY MARKET FOR THE 2006A BONDS. This cover page contains information for quick reference only. It is not a summary of the 2006A Bonds. Investors must read the entire Limited Offering Memorandum to obtain information essential to the making of an informed investment decision. MATURITY SCHEDULE $33,840, % 2006A Term Bonds due May 1, 2037 Price % CUSIP AA9 The 2006A Bonds are offered for delivery when, as and if issued by the District and accepted by the Underwriter, subject to prior sale, withdrawal or modification of the offer without notice and the receipt of the opinion of Ruden, McClosky, Smith, Schuster & Russell, P.A., Fort Lauderdale, Florida, Bond Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Greenberg Traurig, P.A., Orlando, Florida; for the District by its counsel, GrayRobinson, P.A., Orlando, Florida and for the Developer by its counsel, Stump, Storey & Callahan, Orlando, Florida. It is expected that the 2006A Bonds will be available through the facilities of DTC in New York, New York on or about November 20, Dated: November 8, 2006 PRAGER, SEALY & CO., LLC The District is not responsible for the use of the CUSIP numbers referenced herein nor is any representation made by the District as to their correctness; such CUSIP numbers are included solely for the convenience of the readers of this Limited Offering Memorandum.

2 No broker, dealer, salesperson, or other person has been authorized by the District or the Underwriter (as defined herein) to give any information or to make any representations, other than those contained in this Limited Offering Memorandum, and if given or made, such other information or representations must not be relied upon as having been authorized by either of the foregoing. This Limited Offering Memorandum does not constitute an offer to sell or the solicitation of an offer to buy any of the 2006A Bonds and there shall be no offer, solicitation, or sale of the 2006A Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The Underwriter has provided the following sentence for inclusion in this Limited Offering Memorandum. The Underwriter has reviewed the information in this Limited Offering Memorandum 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 and expressions of opinion herein contained are subject to change without notice and neither the delivery of this Limited Offering Memorandum, nor any sale made hereunder, shall, under any circumstances, create any implication that there has been no change in the affairs of the District or the Developer since the date hereof. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2006A 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 2006A BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR HAS THE INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF THE REGISTRATION OR QUALIFICATION OF THE 2006A BONDS UNDER THE SECURITIES LAWS OF ANY JURISDICTIONS IN WHICH THEY MAY HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, SHALL NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THE STATE, THE CITY, THE DISTRICT, NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE 2006A BONDS. THE DISTRICT HAS PASSED UPON THE ACCURACY AND FACTUAL COMPLETENESS OF THIS LIMITED OFFERING MEMORANDUM, OTHER THAN THOSE SECTIONS CAPTIONED "DESCRIPTION OF THE 2006A BONDS - BOOK-ENTRY ONLY SYSTEM," "THE DEVELOPMENT," AND "THE DEVELOPER" HOWEVER, NEITHER THE STATE, THE CITY, NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE ACCURACY OR COMPLETENESS OF THE LIMITED OFFERING MEMORANDUM. CERTAIN STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE IN THIS LIMITED OFFERING MEMORANDUM CONSTITUTE "FORWARD-LOOKING STATEMENTS." SUCH STATEMENTS GENERALLY ARE IDENTIFIABLE BY THE TERMINOLOGY USED, SUCH AS "PLAN," "EXPECT," "ESTIMATE," "BUDGET" OR OTHER SIMILAR WORDS. SUCH FORWARD-LOOKING STATEMENTS INCLUDE BUT ARE NOT LIMITED TO CERTAIN STATEMENTS CONTAINED IN THE INFORMATION UNDER THE CAPTIONS "ESTIMATED SOURCES AND USES OF PROCEEDS" AND "THE DEVELOPMENT" IN THIS LIMITED OFFERING MEMORANDUM. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD- LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES

3 AND OTHER FACTORS THAT 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. NEITHER THE DEVELOPER (AS DEFINED HEREIN) NOR THE DISTRICT PLANS TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR, SUBJECT TO ANY CONTRACTUAL OR LEGAL RESPONSIBILITIES TO THE CONTRARY.

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5 TABLE OF CONTENTS INTRODUCTION...1 DESCRIPTION OF THE 2006A BONDS...2 General...2 Redemption Provisions...4 Notice of Redemption...6 Book-Entry Only System...7 ESTIMATED SOURCES AND USES OF PROCEEDS...10 DEBT SERVICE REQUIREMENTS FOR 2006A BONDS...11 SECURITY FOR AND SOURCE OF PAYMENT OF THE 2006A BONDS...12 General...12 No Parity Bonds...14 Enforcement of Payment of 2006 Assessments...14 Developer Prepayment Waiver...14 Adjustments to 2006 Assessments...15 ENFORCEMENT OF ASSESSMENT COLLECTIONS...15 Tax Collection Procedures...15 Collection through Uniform Method...15 Sale of Tax Certificates...16 Judicial Proceedings...18 FUNDS AND ACCOUNTS...18 Acquisition and Construction Fund...18 Debt Service Fund...19 Reserve Fund...19 Revenue Fund...20 Rebate Fund...23 BONDHOLDERS RISKS...23 THE DISTRICT...27 Legal Powers and Authority...27 Board of Supervisors...28 The District Manager...29 Outstanding Indebtedness...30 THE 2005 PROJECT...30 THE DEVELOPMENT...30 General...30 Recreational Amenities and Design...31 Land Acquisition and Financing...32 Developer Equity...33 Zoning and Development Approvals...33 District Infrastructure and Finance Plan...34 Financing Plan...34 Residential Development...35 Commercial Development...35 Projected Absorption...36 Page i

6 Marketing...36 Fees and Assessments...36 Competition...37 THE DEVELOPER...37 TAX MATTERS...39 TAX TREATMENT OF ORIGINAL ISSUE DISCOUNT...41 AGREEMENT BY THE STATE...41 LEGALITY FOR INVESTMENT...42 SUITABILITY FOR INVESTMENT...42 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS...42 CONTINUING DISCLOSURE...42 ENFORCEABILITY OF REMEDIES...43 LITIGATION...43 RATING...43 UNDERWRITING...44 VALIDATION...44 EXPERTS...44 LEGAL MATTERS...44 DISCLOSURE OF MULTIPLE ROLES...44 MISCELLANEOUS...45 APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E FORMS OF MASTER INDENTURE AND SECOND SUPPLEMENTAL TRUST INDENTURE FORM OF OPINION OF BOND COUNSEL ENGINEER S REPORT MASTER ASSESSMENT METHODOLOGY AND FINAL SUPPLEMENTAL ASSESSMENT METHODOLOGY FORM OF CONTINUING DISCLOSURE AGREEMENT ii

7 LIMITED OFFERING MEMORANDUM $33,840,000 CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT (City of Clearwater, Florida) Capital Improvement Revenue Bonds, Series 2006A INTRODUCTION The purpose of this Limited Offering Memorandum, including the cover page and appendices hereto, is to provide information concerning the Clearwater Cay Community Development District (the "District"), in connection with the issuance of its $33,840,000 Clearwater Cay Community Development District (City of Clearwater, Florida) Capital Improvement Revenue Bonds, Series 2006A (the "2006A Bonds"). The District was created pursuant to the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended (the "Act"). The 2006A Bonds are being issued by the District pursuant to the Act, Resolution No adopted by the Board of Supervisors of the District (the "Board") on November 28, 2005, as supplemented by Resolution No adopted by the Board on October 17, 2006 (collectively, the "Resolution"), and a Master Trust Indenture dated as of December 1, 2005 (the "Master Indenture"), between the District and U.S. Bank National Association, a national banking association, as successor in trust to the corporate trusts of Wachovia Bank, National Association, as trustee (the "Trustee") as supplemented by the Second Supplemental Trust Indenture dated as of November 1, 2006 between the District and the Trustee (the "Second Supplemental Indenture," and together with the Master Indenture, the "Indenture"). Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Indenture. See "APPENDIX A - FORMS OF MASTER INDENTURE AND SECOND SUPPLEMENTAL TRUST INDENTURE" attached hereto. The 2006A Bonds are not a suitable investment for all investors. See "BONDHOLDERS RISKS" and "SUITABILITY FOR INVESTMENT" herein. Pursuant to applicable State law, the Underwriter is limiting this initial offering of the 2006A Bonds to only Accredited Investors within the meaning of the Rules of the Florida Department of Financial Services; the limitation of the initial offering to Accredited Investors does not denote restrictions on transfer in any secondary market for the 2006A Bonds. Other than as referenced in the section captioned "SUITABILITY FOR INVESTMENT" herein, no person has been authorized by the District or the Underwriter to give any information or to make any representations, other than those contained in this Limited Offering Memorandum, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. The District was established pursuant to Ordinance No enacted by the City Commission of the City on September 15, 2005, which became effective September 23, 2005; as amended, under the provisions of the Act for the purposes of, among other things, financing and managing the acquisition, construction, maintenance and operation of the major infrastructure

8 necessary within the District for community development. In addition to certain general powers, the Act authorizes the District, among other things, to issue the bonds for the purpose of, among others, financing, funding, planning, establishing, acquiring, constructing or reconstructing, enlarging or extending, equipping, operating and maintaining water management, water supply, sewer and wastewater management, bridges or culverts, district roads, street lights and other basic infrastructure projects within the boundaries of the District as provided in the Act. The 2006A Bonds are the second series of securities, although the first issue of Bonds, to be issued by the District and are being issued to: (i) pay, together with other legally available funds of the District, all amounts due and owing under the District's $30,650,000 Bond Anticipation Notes, Series 2005, the entire aggregate principal amount of which is currently outstanding (the "2005 Notes"); (iii) fund the 2006 Reserve Account established for the 2006A Bonds; and (iv) pay certain costs associated with the issuance of the 2006A Bonds. See "ESTIMATED SOURCES AND USES OF PROCEEDS" and "THE 2005 PROJECT" herein and "APPENDIX C - ENGINEER'S REPORT" attached hereto. There follows in this Limited Offering Memorandum brief descriptions of the District and certain provisions of the Act, the 2005 Project (as defined herein) to be constructed and acquired with the proceeds of the 2005 Notes (as defined herein), together with summaries of the terms of the 2006A Bonds and the Indenture. All references herein to the Indenture and the Act are qualified in their entirety by reference to such documents and all references to the 2006A Bonds are qualified by reference to the definitive forms thereof and the information with respect thereto contained in the Indenture. General DESCRIPTION OF THE 2006A BONDS The 2006A Bonds are issuable only in fully registered form, in denominations of $5,000 provided, however, that the 2006A Bonds will be deliverable to the initial purchasers in denominations of $100,000 or integral multiples of $5,000 in excess thereof. The 2006A Bonds will be sold only to Accredited Investors, as such term is defined in the Rules of the Florida Department of Financial Services; the limitation of the initial offering to Accredited Investors does not denote restrictions on transfer in any secondary market for the 2006A Bonds. The 2006A Bonds will be dated November 1, 2006, shall bear the date of authentication and each 2006A Bond shall bear interest from the Interest Payment Date to which interest has been paid next preceding the date of its authentication, unless the date of its authentication: (i) is an Interest Payment Date to which interest on such 2006A Bond has been paid, in which event such 2006A Bond shall bear interest from its date of authentication; or (ii) is prior to the first Interest Payment Date for the 2006A Bonds, in which event such 2006A Bond shall bear interest from its dated date. Interest on the 2006A Bonds shall be due and payable on each May 1 and November 1, commencing May 1, 2007, and shall be computed on the basis of a 360-day year of twelve 30-day months. The 2006A Bonds shall be initially issued in the form of a separate single certificated fully registered 2006A Bond for each series and maturity of 2006A Bonds. Upon initial 2

9 issuance, the ownership of each such 2006A Bond shall be registered in the registration books kept by the Bond Registrar in the name of Cede & Co., as Nominee of The Depository Trust Company, New York, New York ("DTC"), the initial Bond Depository. See "DESCRIPTION OF THE 2006A BONDS - Book-Entry Only System" herein. Except as provided herein and in the Indenture, all of the Outstanding 2006A Bonds shall be registered in the registration books kept by the Bond Registrar in the name of Cede & Co., as nominee of DTC. With respect to 2006A Bonds registered in the registration books kept by the Bond Registrar in the name of Cede & Co., as Nominee of DTC, the District, the Trustee, the Bond Registrar and the Paying Agent shall have no responsibility or obligation to any such Bond Participant or to any indirect Bond Participant. Without limiting the immediately preceding sentence, the District, the Trustee, the Bond Registrar and the Paying Agent shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Bond Participant with respect to any ownership interest in the 2006A Bonds, (ii) the delivery to any Bond Participant or any other person other than an Owner, as shown in the registration books kept by the Bond Registrar, of any notice with respect to the 2006A Bonds, including any notice of redemption, or (iii) the payment to any Bond Participant or any other person, other than an Owner, as shown in the registration books kept by the Bond Registrar, of any amount with respect to principal of, premium, if any, or interest on the 2006A Bonds. The District, the Trustee, the Bond Registrar and the Paying Agent may treat and consider the person in whose name each 2006A Bond is registered in the registration books kept by the Bond Registrar as the absolute owner of such 2006A Bond for the purpose of payment of principal, premium and interest with respect to such 2006A Bond, for the purpose of giving notices of redemption and other matters with respect to such 2006A Bond, for the purpose of registering transfers with respect to such 2006A Bond, and for all other purposes whatsoever. The Paying Agent shall pay all principal of, premium, if any, and interest on the 2006A Bonds only to or upon the order of the respective Owners, as shown in the registration books kept by the Bond Registrar, or their respective attorneys duly authorized in writing, as provided in the Indenture and all such payments shall be valid and effective to fully satisfy and discharge the District's obligations with respect to payment of principal of, premium, if any, and interest on the 2006A Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the registration books kept by the Bond Registrar, shall receive a certificated 2006A Bond evidencing the obligation of the District to make payments of principal, premium, if any, and interest pursuant to the provisions of the Second Supplemental Indenture. Upon delivery by DTC to the District of written notice to the effect that DTC has determined to substitute a new Nominee in place of Cede & Co., and subject to the provisions in the Second Supplemental Indenture with respect to Record Dates, the words "Cede & Co." herein and in the Second Supplemental Indenture shall refer to such new Nominee of DTC; and upon receipt of such a notice the District shall promptly deliver a copy of the same to the Trustee, Bond Registrar and the Paying Agent. Upon receipt by the Trustee or the District of written notice from DTC: (i) confirming that DTC has received written notice from the District to the effect that a continuation of the requirement that all of the Outstanding 2006A Bonds be registered in the registration books kept by the Bond Registrar in the name of Cede & Co., as Nominee of DTC, is not in the best interest of the beneficial owners of the 2006A Bonds or (ii) to the effect that DTC is unable or unwilling to discharge its responsibilities and no substitute Bond Depository willing to undertake the functions of DTC under the Second Supplemental Indenture can be found which is willing and 3

10 able to undertake such functions upon reasonable and customary terms, the 2006A Bonds shall no longer be restricted to being registered in the registration books kept by the Bond Registrar in the name of Cede & Co., as Nominee of DTC, but may be registered in whatever name or names Owners transferring or exchanging the 2006A Bonds shall designate, in accordance with the provisions of the Second Supplemental Indenture. U.S. Bank National Association is the initial Trustee, Bond Registrar, and Paying Agent for the 2006A Bonds. Redemption Provisions Optional Redemption. The 2006A Bonds may, at the option of the District be called for redemption as a whole, at any time, or in part on any Interest Payment Date, on or after May 1, 2016 (less than all 2006A Bonds to be selected by lot), at a Redemption Price (expressed as percentages of principal amount) of 100% of the Outstanding principal amount thereof, without premium, plus accrued interest from the most recent Interest Payment Date to the redemption date. Mandatory Redemption. The 2006A Bonds are subject to mandatory redemption in part by the District by lot prior to their scheduled maturity from moneys in the 2006 Sinking Fund Account established under the Second Supplemental Indenture in satisfaction of the applicable Amortization Installments (as defined in the Master Indenture) at the Redemption Price of the principal amount thereof, without premium, together with accrued interest to the date of redemption, on May 1 of the years and in the principal amounts set forth below: [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 4

11 *Final Maturity. Year Amortization Installment 2008 $455, , , , , , , , , , , , , , , ,035, ,095, ,160, ,225, ,295, ,365, ,445, ,525, ,610, ,705, ,800, ,900, ,010, ,120, * 2,240,000 As more particularly set forth in the Indenture, any 2006A Bonds that are purchased by the District with amounts held to pay an Amortization Installment will be cancelled and the principal amount so purchased will be applied as a credit against the applicable Amortization Installment of 2006A Bonds. Amortization Installments are also subject to recalculation, as provided in the Second Supplemental Indenture, as the result of the redemption of 2006A Bonds 5

12 so as to reamortize the remaining Outstanding principal balance of the 2006A Bonds as set forth in the Second Supplemental Indenture. Extraordinary Mandatory Redemption. The 2006A Bonds are subject to extraordinary mandatory redemption prior to maturity, in whole on any date or in part on any Interest Payment Date, in the manner determined by the Bond Registrar at the Redemption Price of 100% of the principal amount thereof, without premium, together with accrued interest to the date of redemption, if and to the extent that any one or more of the following shall have occurred: (i) on or after the Date of Completion of the 2005 Project, by application of moneys transferred from the 2006 Acquisition and Construction Account in the Acquisition and Construction Fund established under the Indenture to the 2006 Prepayment Subaccount of the 2006 Redemption Account in accordance with the terms of the Indenture; or (ii) from Prepayments (as defined in the Indenture) deposited into the 2006 Prepayment Subaccount of the 2006 Redemption Account or from amounts transferred from the 2006 Reserve Account into the 2006 Prepayment Subaccount of the 2006 Redemption Account after the deposit to the 2006 Reserve Account of a Reserve Account Credit Instrument; or (iii) from amounts on deposit in the 2006 Reserve Account, together with other moneys available therefor, sufficient to pay and redeem all of the 2006A Bonds then Outstanding, including accrued interest thereon. Except as otherwise provided in the Indenture, if less than all of the 2006A Bonds subject to redemption shall be called for redemption, the particular 2006A Bonds or portions of such 2006A Bonds to be redeemed shall be selected by lot by the Registrar as provided in the Indenture. Notice of Redemption Notice of each redemption of 2006A Bonds is required to be mailed by the Bond Registrar, postage prepaid, not less than thirty (30) nor more than forty-five (45) days prior to the redemption date to each registered Owner of 2006A Bonds to be redeemed at the address of such registered Owner recorded on the bond register maintained by the Bond Registrar. On the date designated for redemption, notice having been given and money for the payment of the Redemption Price being held by the Paying Agent, all as provided in the Indenture, the 2006A Bonds or such portions thereof so called for redemption shall become and be due and payable at the Redemption Price provided for the redemption of such Bonds or such portions thereof on such date, interest on such 2006A Bonds or such portions thereof so called for redemption shall cease to accrue, such 2006A Bonds or such portions thereof so called for redemption shall cease to be entitled to any benefit or security under the Indenture and the Owners thereof shall have no rights in respect of such 2006A Bonds or such portions thereof so called for redemption except to receive payments of the Redemption Price thereof so held by the Paying Agent. Further notice of redemption shall be given by the Bond Registrar to certain registered securities depositories and information services as set forth in the Indenture, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. 6

13 Reference is hereby specifically made to "APPENDIX A - FORMS OF MASTER INDENTURE AND SECOND SUPPLEMENTAL TRUST INDENTURE" attached hereto for additional details concerning the redemption of 2006A Bonds. Book-Entry Only System The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that District believes to be reliable, but District takes no responsibility for the accuracy thereof. DTC will act as securities depository for the 2006A Bonds. The 2006A Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered 2006A Bond certificate will be issued for each maturity of the 2006A Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest depository, is a limited purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for U.S. and non-u.s. equity, corporate and municipal debt issues, and money market instruments that DTC's participants (the "Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC rules applicable to its Direct and Indirect Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of interests in 2006A Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2006A Bonds on DTC's records. The ownership interest of each actual purchaser of each 2006A Bond (the "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic 7

14 statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2006A Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the 2006A Bonds, except in the event that use of the book-entry system for the 2006A Bonds is discontinued. To facilitate subsequent transfers, all 2006A Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co or such other name as may be requested by an authorized representative of DTC. The deposit of 2006A Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2006A Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 2006A Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of 2006A Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the 2006A Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. Beneficial Owners of 2006A Bonds may wish to ascertain that the nominee holding the 2006A Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the 2006A Bonds within a series or maturity of a series are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such series or maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the 2006A Bonds unless authorized by a Direct Participant in accordance with DTC's procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the 2006A Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, premium, if any, and interest payments on the 2006A Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the District or the Paying Agent on a payment date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street 8

15 name," and will be the responsibility of such Participant and not of DTC, nor its nominee the Paying Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, and interest on the 2006A Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. THE DISTRICT, THE PAYING AGENT AND REGISTRAR DO NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO THE DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO THE 2006A BONDS IN RESPECT OF: (A) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT; (B) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OF, REDEMPTION PRICE OR INTEREST ON THE 2006A BONDS; (C) THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE TO BE GIVEN TO OWNERS; (D) THE SELECTION BY DTC OR ANY DTC PARTICIPANT OF ANY BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF PARTIAL REDEMPTION OF THE 2006A BONDS; OR (E) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC, OR ITS NOMINEE, CEDE & CO., AS OWNERS. AS LONG AS CEDE & CO., AS NOMINEE OF DTC, IS THE REGISTERED OWNER OF THE 2006A BONDS, REFERENCES IN THIS LIMITED OFFERING MEMORANDUM TO THE OWNERS OR HOLDERS OF THE 2006A BONDS SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE 2006A BONDS. DTC may discontinue providing its services as securities depository with respect to the 2006A Bonds at any time by giving reasonable notice to the District or the Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, 2006A Bond certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book entry transfers through DTC (or a successor securities depository). In that event, 2006A Bond certificates will be printed and delivered. In either of the situations described in the preceding two paragraphs, definitive replacement 2006A Bonds shall be issued only upon surrender to the Registrar of the 2006A Bonds of each maturity by DTC, accompanied by registration instructions for the definitive replacement 2006A Bonds for such maturity from DTC. The District shall not be liable for any delay in delivery of such instructions and conclusively may rely on and shall be protected in relying on such instruction of DTC. 9

16 ESTIMATED SOURCES AND USES OF PROCEEDS SOURCES Par Amount of 2006A Bonds...$33,840, Note Proceeds (1)...3,378, Accrued Interest...98, Original Issue Discount... (169,200.00) TOTAL SOURCES:...$37,147, USES Redemption of 2005 Notes...$32,187, Costs of Issuance Account...206, Underwriter s Discount...676, Interest Account...98, Capitalized Interest Account...1,672, Reserve Account... 2,305, TOTAL USES:...$37,147, (1) Represents $3,378, from funds and accounts held by the Trustee for the 2005 Notes. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 10

17 DEBT SERVICE REQUIREMENTS FOR 2006A BONDS Date Principal Coupon Interest Total May 1, % $930, $930, November 1, , , May 1, 2008 $455, , ,385, November 1, , , May 1, , , ,398, November 1, , , May 1, , , ,414, November 1, , , May 1, , , ,425, November 1, , , May 1, , , ,441, November 1, , , May 1, , , ,460, November 1, , , May 1, , , ,474, November 1, , , May 1, , , ,496, November 1, , , May 1, , , ,513, November 1, , , May 1, , , ,533, November 1, , , May 1, , , ,558, November 1, , , May 1, , , ,581, November 1, , , May 1, , , ,603, November 1, , , May 1, , , ,629, November 1, , , May 1, , , ,654, November 1, , , May 1, ,035, , ,682, November 1, , , May 1, ,095, , ,713, November 1, , , May 1, ,160, , ,748, November 1, , , May 1, ,225, , ,781, November 1, , , May 1, ,295, , ,817, November 1, , , May 1, ,365, , ,852, November 1, , , May 1, ,445, , ,894, November 1, , , May 1, ,525, , ,935, November 1, , , May 1, ,610, , ,978, November 1, , , May 1, ,705, , ,028, November 1, , , May 1, ,800, , ,076, November 1, , , May 1, ,900, , ,127, November 1, , , May 1, ,010, , ,185, November 1, , , May 1, ,120, , ,239, November 1, , , May 1, 2037** 2,240, , ,301, **Final Maturity $33,840, $37,122, $70,962,

18 SECURITY FOR AND SOURCE OF PAYMENT OF THE 2006A BONDS General The principal of and interest on the 2006A Bonds issued under the Indenture will be secured by a lien upon the amounts collected by or on behalf of the District from landowners or otherwise collected as a result of the 2006 Assessments levied by the District to secure the 2006A Bonds in accordance with the 2006 Assessment Proceedings, including amounts received from the collection of Delinquent Assessments (collectively, the "2006 Assessment Revenues" or the "2006 Pledged Revenues") and the Funds and Accounts (except for the 2006 Rebate Account established pursuant to the Second Supplemental Indenture) (the "2006 Pledged Funds and Accounts"). The 2006 Assessments will be levied upon land within the District specially benefited by certain infrastructure improvements acquired, constructed and equipped by the District from the proceeds of the 2005 Notes (as more particularly described under "THE 2005 PROJECT" herein). The Indenture provides the Series 2005 Pledged Revenues shall immediately be subject to the lien and pledge of the Indenture without any physical delivery thereof or further act. The Indenture provides that the pledge of the revenues derived by the District from the 2006 Assessments shall be valid and binding from and after the date of delivery of the 2006A Bonds, and the proceeds of the 2006A Bonds and the 2006l Assessments, respectively, shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act, and the lien of the pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the District irrespective of whether such parties have notice thereof; provided, however, that the lien and pledge of the Indenture shall not apply to any moneys transferred by the Trustee to the 2006 Rebate Account. The 2006 Assessments consist of all non-ad valorem assessments levied and collected by or on behalf of the District pursuant to the Act, together with the interest specified by resolutions adopted by the District, the interest specified in Chapter 170 Florida Statutes, as amended, if any such interest is collected by or on behalf of the District, and any applicable penalties collected by or on behalf of the District, together with any and all amounts received by the District from the sale of tax certificates or otherwise from the collection of Delinquent Assessments and which are referred to as such and pledged to the 2006A Bonds pursuant to the Indenture. For purposes hereof, Delinquent Assessment means any and all installments of any 2006 Assessments which are not paid within thirty (30) days of the date on which such installments are due and payable. The Act authorizes the District to permanently finance the construction of the improvements funded by the 2005 Notes (the "2005 Project") by levying 2006 Assessments upon lands benefited thereby. Non-ad valorem assessments are not based on millage and can become a lien against the homestead as permitted in Section 4, Article X of the Florida State Constitution. The 2006 Assessments are expected to be collected directly by the District until such time as the property subject to the 2006 Assessments is platted and a district property tax 12

19 identification number has been assigned by the Property Appraiser to the lots so platted; thereafter the 2006 Assessments are expected to be collected pursuant to the uniform method for collecting non ad valorem assessments described in Chapter 197 of the Florida Statutes, and specifically Section thereof (such method referred to in this Limited Offering Memorandum, as the "Uniform Method"). Under the Uniform Method for collecting non ad valorem assessments, if and when implemented, the Property Appraiser will list on the assessment roll for each of the relevant tax years any 2006 Assessments, will include in the notice of proposed property taxes the dollar amount of such 2006 Assessments, and will include on the tax notice issued pursuant to Section , Florida Statutes, the dollar amount of such 2006 Assessments. If payments of 2006 Assessments are remitted by the Tax Collector to the District, the District agrees to give such consents and to take such other steps as may be necessary to permit the Paying Agent, in its discretion, to obtain information from the Tax Collector concerning the amount and date of each such payment of 2006 Assessments to the District. Concerning any Delinquent Assessments, the District covenants in the Indenture that if the owner of any lot or parcel of land shall be delinquent in the payment of any 2006 Assessment, then such 2006 Assessments shall be enforced in accordance with the provisions of Chapter 190, Florida Statutes or collected pursuant to the provisions of Chapters 170 and 197, Florida Statutes, as applicable, including but not limited to the sale of tax certificates and tax deeds regarding such Delinquent Assessment. If any property shall be offered for sale for the nonpayment of any 2006 Assessment which is pledged to the 2006A Bonds and no person or persons shall purchase such property for an amount equal to the full amount due on the 2006 Assessment (principal, interest, penalties and costs, plus attorneys fees, if any), the property shall then be purchased by the District for an amount equal to the balance due on the Assessment (principal, interest, penalties and costs, plus attorneys fees, if any), together with any ad valorem taxes and other amounts owed by the owner of such property to the Tax Collector and that constitute a lien against such property, but only from any legally available funds of the District, and the District shall receive in its corporate name title to the property for the benefit of the Beneficial Owners of the 2006A Bonds to which such 2006 Assessments were pledged. It should be noted that is not likely the District will have sufficient funds to complete such a purchase. The District covenants in the Indenture, that if any 2006 Assessment shall be either in whole or in part annulled, vacated or set aside by the judgment of any court, or the District shall be satisfied that any such 2006 Assessments are so irregular or defective that it cannot be enforced or collected, or if the District shall have omitted to make such 2006 Assessments when it might have done so, the District shall either: (i) take all necessary steps to cause a new Assessment to be made for the whole or any part of such improvement or against any property benefited by such improvement; or (ii) in its sole discretion, make up the amount of such Assessment from legally available moneys, which moneys shall be deposited into the 2006 Revenue Account. In case any such subsequent Assessment shall also be annulled, the District shall obtain and make other Assessments until a valid Assessment shall be made. 13

20 Please refer to "APPENDIX D - MASTER ASSESSMENT METHODOLOGY AND FINAL SUPPLEMENTAL ASSESSMENT METHODOLOGY" for a description of the 2006 Assessments and the methodology by which they are levied. No Parity Bonds Except as otherwise provided in the Second Supplemental Indenture, the District shall not cause or permit to be caused any lien, charge or claim against the 2006 Trust Estate; provided, however, that the District reserves the right to issue bonds, notes or other obligations payable from or secured by the 2006 Trust Estate pledged to the 2006A Bonds, but only so long as such bonds, notes or other obligations are not entitled to a lien upon or charge against the 2006 Trust Estate equal or prior to the lien of the Second Supplemental Indenture securing the 2006A Bonds. Enforcement of Payment of 2006 Assessments Chapter , Florida Statutes, provides that upon the failure of any property owner to pay the principal of the 2006 Assessment or the interest thereon, when due, the governing body of the District is authorized to commence legal proceedings for the enforcement of the payment thereof, including commencement of an action in chancery, commencement of a foreclosure proceeding in the same manner as the foreclosure of a real estate mortgage, or commencement of an action under Chapter 173, Florida Statutes, relating to foreclosure of municipal tax and special assessment liens. Any foreclosure proceedings to enforce payment of the 2006 Assessments will most probably proceed under the provisions of Chapter 173, Florida Statutes, which provides that after the expiration of one year from the date any special assessment or installment thereof becomes due, the District may commence a foreclosure proceeding against the lands upon which the 2006 Assessments are liens. Such a proceeding is in rem, meaning that it is brought against the land and not against the owner. The statutes relating to enforcement of county taxes provide that county taxes first become payable on November 1 of the year when assessed and constitute a lien upon the assessed land from January 1 of such year. The 2006 Assessments will be levied from the date of adoption by the Board of Supervisors of the District of the final assessment roll. See "ENFORCEMENT OF ASSESSMENT COLLECTIONS - Tax Collection Procedures" herein. As referenced above, the Florida Statutes provide that, subject to certain conditions, 2006 Assessments may be collected in the same manner as county ad valorem taxes. The 2006 Assessments securing the 2006 Bonds are to be collected in this manner at such time as the property subject to the 2006 Assessments is platted and the District ad valorem tax identification number has been assigned by the Property Appraiser for the County. Developer Prepayment Waiver Pursuant to the terms of the Act and the Assessment Proceedings, the owner of property subject to 2006 Assessments may pay the entire balance of the 2006 Assessments used to finance the 2005 Project remaining due within thirty (30) days after the 2005 Project has been completed and the Board has adopted a resolution accepting the 2005 Project as provided by Florida 14

21 Statutes, Section , without interest. The Developer (as defined herein) will at the time of delivery of the 2006A Bonds waive this right in writing. Adjustments to 2006 Assessments Upon completion of the 2005 Project, if the actual costs of the 2005 Project are less than the principal amount of the 2006 Assessments, the 2006 Assessments shall be reduced in a corresponding amount. In making such credit, no credit shall be given for 2006A Bonds financing costs, capitalized interest, funded reserves or 2006A Bonds discount. Tax Collection Procedures ENFORCEMENT OF ASSESSMENT COLLECTIONS As stated herein, one of the primary prospective sources of payment for the 2006A Bonds are the 2006 Assessments imposed on each parcel of benefited land within the District pursuant to the Assessment Proceedings. To the extent that landowners fail to pay such 2006 Assessments, delay payments, or are unable to pay the same, the successful pursuance of collection procedures available to the District is essential to continued payment of principal of and interest on the 2006A Bonds. The Act provides for various methods of collection of Delinquent Assessments by reference to other provisions of the Florida Statutes. The following is a description of certain statutory provisions of assessment payment and collection procedures appearing in the Florida Statutes, but is qualified in its entirety by reference to such statutes. The 2006 Assessments securing the 2006A Bonds will be payable in annual installments. The determination, order, levy and collection of 2006 Assessments must be done in compliance with procedural requirements and guidelines provided by State law. Failure by the District or the Tax Collector or the Property Appraiser to comply with such requirements could result in delays in the collection of, or the complete inability to collect, 2006 Assessments during any year. Such delays in the collection of, or complete inability to collect, 2006 Assessments could have a material adverse effect on the ability of the District to make full or punctual payment of Debt Service on the 2006A Bonds. The 2006 Assessments securing the 2006A Bonds for those lots that have not been platted will be payable in semi annual installments and will be levied by the District each year. Collection through Uniform Method As referenced in "SECURITY FOR AND SOURCE OF PAYMENT OF THE 2006A BONDS," the Florida Statutes provide that, subject to certain conditions, special assessments such as the 2006 Assessments may be collected in the same manner as county ad valorem taxes (this is the method to be employed for the 2006 Assessments securing the 2006A Bonds once a lot is platted). The statutes relating to enforcement of county taxes provide that county taxes become due and payable on November 1 of the year when assessed and constitute a lien upon the land from January 1 of such year. Special assessments represent a lien on the land against which they are assessed from January 1 of the year of assessment until paid or barred by operation of law. The lien of the 2006 Assessments collected through the Uniform Method is of equal dignity with the liens for state and county taxes upon land, and thus is a first lien, superior to all other 15

22 liens, including mortgages (except for state and county taxes and other taxes which are of equal dignity). The Tax Collector is to bill such taxes together with all other County taxes, and landowners in the District are required to pay all such taxes without preference in payment of any particular increment of the tax bill, such as the increment owing for the 2006 Assessments. Upon receipt by the Tax Collector of the 2006 Assessments, moneys therefrom will be deposited as provided in the Indenture. All County, school and special district taxes, 2006 Assessments (if the uniform method of collection is utilized) and voter approved ad-valorem taxes levied to pay principal of and interest on bonds, including the 2006 Assessments levied by the District, are payable at one time. If a taxpayer does not make complete payment, he or she cannot designate specific line items on his or her tax bill as deemed paid in full. In such cases, the Tax Collector does not accept such partial payment and the partial payment is returned to the taxpayer. Therefore, any failure to pay any one line item, whether it be the 2006 Assessments or not, would cause the 2006 Assessments collected by this method to not be collected to that extent, which would have a significant adverse effect on the ability of the District to make full or punctual payment of Debt Service on the 2006A Bonds. If 2006 Assessments collected by this method are paid during November when due or during the following three months, the taxpayer is granted a variable discount equal to 4% in November and decreasing one percentage point per month to 1% in February. All unpaid taxes become delinquent on April 1 of the year following assessment, and the Tax Collector is required to collect taxes prior to April 1 and after that date to institute statutory procedures upon delinquency to collect assessed taxes. Delay in the mailing of tax notices to taxpayers may result in a delay throughout this process. Sale of Tax Certificates The collection of Delinquent Assessments collected by the uniform method is, in essence, based upon the sale by the Tax Collector of "tax certificates" and remittance of the proceeds of such sale to the District for the payment of the 2006 Assessment due. The demand for such certificates is in turn dependent upon various factors, which include the interest that can be earned by ownership of such certificates and the value of the land that is the subject of such certificates and which may be subject to sale at the demand of the certificate holder. Therefore, the underlying value of the land within the District may affect the demand for such certificates and the successful collection of the 2006 Assessments. See "BONDHOLDERS RISKS" herein. In the event of a delinquency in the payment of taxes on real property, the Tax Collector is required to attempt to sell tax certificates on such property to the person who pays the delinquent taxes and interest and certain costs and charges relating thereto, and who accepts the lowest interest rate per annum to be borne by the certificates (not to exceed 18%). Delinquent taxes may be paid by a taxpayer prior to the date of sale of a tax certificate by the payment of such taxes, together with interest and all costs and charges relating thereto. Generally, tax certificates are sold by public bid. If there are no bidders at the public sale of tax certificates, the certificate is issued to the county in which the assessed lands are located, at the maximum rate of interest allowed (currently 18%). The Tax Collector does not collect any money if tax certificates are issued to the County. Proceeds from the sale of tax certificates are required to be 16

23 used to pay taxes (including 2006 Assessments), interest, costs and charges on the real property described in the certificate. County held certificates may be purchased and any tax certificate may be redeemed, in whole, by any person at any time before a tax deed is issued or the property is placed on the list of lands available for sale, at a price equal to the face amount of the certificate or portion thereof together with all interest, costs, charges and omitted taxes due. The proceeds of such a redemption are paid to the Tax Collector who transmits to the holder of the certificate such proceeds less service charges, and the certificate is canceled. Any holder, other than the County, of a tax certificate that has not been redeemed has seven years from the date of issuance of the tax certificate during which to act against the land that is the subject of the tax certificate. After an initial period ending at least two years from April 1 of the year of issuance of a certificate, during which period actions against the land are held in abeyance to allow for sales and redemptions of tax certificates and before the expiration of seven years from the date of issuance, the holder of a certificate may apply for a tax deed to the subject land. The applicant is required to pay to the Tax Collector at the time of application all amounts required to redeem or purchase all other outstanding tax certificates covering the land, plus interest, any omitted taxes or delinquent taxes and interest, and current taxes, if due. If the County holds a tax certificate on property valued at $5,000 or more and has not succeeded in selling it, the county must apply for a tax deed two years after April 1 of the year of issuance. The County pays costs and fees to the Tax Collector but not any amount to redeem any other outstanding certificates covering the land. Thereafter, the property is advertised for public sale. In any such public sale, the private holder of the tax certificate who is seeking a tax deed for non-homestead property is deemed to submit a minimum bid equal to the amount required to redeem the tax certificate, charges for the cost of sale, redemption of other tax certificates on the land, and the amount paid by such holder in applying for the tax deed, plus interest thereon. In the case of homestead property, the bid is also deemed to include an amount equal to one-half of the latest assessed value of the homestead. If there are no higher bids, the holder receives title to the land and the amounts paid for the certificate and in applying for a tax deed are credited towards the purchase price. If there are other bids, the holder may enter the bidding. The highest bidder is awarded title to the land. The portion of proceeds of such sale needed to redeem the tax certificate, and all other amounts paid by such person in applying for a tax deed, are forwarded to the holder thereof or credited to such holder if such holder is the successful bidder. Excess proceeds are distributed first to satisfy governmental liens against the land and then to the former title holder of the property (less service charges), lienholders of record, mortgagees of record, vendees of recorded contracts for deeds, and other lienholders and any other person to whom the land was last assessed on the tax roll for the year in which the land was assessed, all as their interests may appear. Except for certain governmental liens and certain restrictive covenants and restrictions, no right, interest, restriction or other covenant survives the issuance of a tax deed. Thus, for example, outstanding mortgages on property subject to a tax deed would be extinguished. If there are no bidders at the public sale, the County may at any time within ninety (90) days from the date of offering for public sale purchase the land without further notice or 17

24 advertising for a statutorily prescribed opening bid. After ninety (90) days have passed, any person or governmental unit may purchase the land by paying the amount of the opening bid. Three years from the date of offering for public sale, unsold lands escheat to the County in which they are located and all tax certificates and liens against the property are canceled and a deed is executed vesting title in the County Commissioners. Judicial Proceedings If the uniform method of collection is not utilized for any reason (such as in the case of the 2006 Assessments securing the 2006A Bonds on unplatted lots), in the event tax certificates are not sold with respect to Delinquent Assessments, the foreclosure of the lien of Delinquent Assessments may be accomplished by a judicial proceeding pursuant to Chapter 173, Florida Statutes. Pursuant to this procedure, the District would bring suit to foreclose the lien of any Delinquent Assessments in the Circuit Court. A proceeding under Chapter 173, Florida Statutes, may not be commenced until one year from the date the 2006 Assessments become due and payable. The District may also foreclose on the lien of Delinquent Assessments pursuant to Section , Florida Statutes, which provides that upon the failure of any property owner to pay the principal of the 2006 Assessments or the interest thereon, when due, the governing body of the District is authorized to commence legal proceedings for the enforcement of the payment thereof, including commencement of an action in chancery, commencement of a foreclosure proceeding in the same manner as the foreclosure of a real estate mortgage. In general, after the District commences the suit, there is a period of notice to, and an opportunity for response by, affected persons. Ultimately a hearing will be held and, if the court decides in favor of the District, a judgment will be rendered in the amount of the Delinquent Assessments and costs of the proceeding. The judgment would also direct sale of the land subject to the Delinquent Assessments by public bid to the highest bidder, with proceeds of the sale being applied to payment of the Delinquent Assessments. If no bidder bids at least the amount of the Delinquent Assessments and applicable costs, the District may obtain title to the land. Enforcement of the obligation to pay 2006 Assessments and the ability of the Tax Collector to sell tax certificates and ultimately tax deeds, or the ability to foreclose the lien created by the failure to pay 2006 Assessments, may not be readily available or may be limited as such enforcement is dependent upon judicial actions that are often subject to discretion and delay. FUNDS AND ACCOUNTS Pursuant to the Second Supplemental Indenture, the following Funds and Accounts are held by the Trustee: Acquisition and Construction Fund Within the Acquisition and Construction Fund held by the Trustee is the (a) 2006 Acquisition and Construction Account, (b) 2006 Costs of Issuance Account, and (c) a 2006 Capitalized Interest Account. 18

25 2006 Acquisition and Construction Account. Amounts on deposit in the 2006 Acquisition and Construction Account shall be applied from time to time to acquire and/or construct components of any unconstructed or unacquired portions of the 2005 Project pursuant to the 2005 Acquisition Agreement, upon compliance with the requisition provisions set forth in the Indenture. Any balance remaining after the Date of Completion of the 2005 Project, after retaining the amount, if any, of all remaining unpaid Costs of the 2005 Project set forth in the Engineers Certificate establishing such Date of Completion, shall, at the written direction of an Authorized Officer of the District, first be transferred to and deposited in the 2006 Rebate Account in the amount, and to the extent necessary, so that the amount on deposit therein equals the rebate amount and thereafter be transferred to and deposited in the 2006 Redemption Account and applied to the redemption of the 2006A Bonds in the manner set forth in the Second Supplemental Indenture or, upon the District obtaining an opinion of nationally recognized bond counsel to the effect that such application will not adversely affect the tax-exempt status of the 2006A Bonds, applied to the Cost of a Series Project or Additional Series Project other than the 2005 Project Capitalized Interest Account. Amounts on deposit in the 2006 Capitalized Interest Account shall be deposited into the 2006 Interest Account and used to pay interest coming due on the 2006A Bonds until there are no longer moneys therein for such purpose Costs of Issuance Account. The amount deposited in the 2006 Costs of Issuance Account shall, at the written direction of an Authorized Officer to the Trustee, be used to pay the costs of issuance relating to the 2006A Bonds pursuant to the Second Supplemental Indenture. At the written direction of an Authorized Officer, any amounts deposited in the 2006 Costs of Issuance Account which are not needed to pay such costs shall be transferred over and deposited into the 2006 Acquisition and Construction Account and used for the purposes permitted therefor by the Indenture. Debt Service Fund Within the Debt Service Fund held by the Trustee are established: (i) a 2006 Debt Service Account and, therein, a 2006 Sinking Fund Account and a 2006 Interest Account; and (ii) a 2006 Redemption Account, and, therein, a 2006 Prepayment Subaccount and an Optional Redemption Subaccount. Reserve Fund Within the Reserve Fund held by the Trustee is the 2006 Reserve Account. The 2006 Reserve Account shall be funded with 2006 Investment Obligations. Amounts on deposit in the 2006 Reserve Account shall be used only for the purpose of making payments into the 2006 Interest Account and the 2006 Sinking Fund Account to pay Debt Service on the 2006A Bonds, when due, without privilege or priority of one 2006A Bond over another, to the extent the moneys on deposit in such Account therein and available therefor are insufficient and for no other purpose. 19

26 On the earliest date on which there is on deposit in the 2006 Reserve Account, sufficient moneys, taking into account other moneys available therefor (other than amounts on deposit in the 2006 Acquisition and Construction Account), to pay and redeem all of the Outstanding 2006A Bonds, together with accrued interest and redemption premium, if any, on such 2006A Bonds to the earliest date of redemption permitted herein, the Trustee shall transfer the amount on deposit in the 2006 Reserve Account into the 2006 Prepayment Subaccount to pay and redeem all of the Outstanding 2006A Bonds on the earliest date permitted for redemption in the Indenture. The District may provide that the 2006 Reserve Requirement required to be on deposit in the 2006 Reserve Account shall be satisfied by obtaining bond insurance issued by a reputable and recognized municipal bond insurer, by a letter of credit rated in one of the two highest categories by one of two nationally recognized rating agencies, by a surety bond or any combination thereof (individually or collectively, the "Reserve Account Credit Instrument"). At any time after the issuance of the 2006A Bonds, the District may withdraw any or all of the amount of money on deposit in the 2006 Reserve Account and substitute in its place a Reserve Account Credit Instrument as described above in the face amount of such withdrawal and such withdrawn moneys shall, after payment of the premium for such Reserve Account Credit Instrument, be transferred to the 2006 Prepayment Subaccount of the 2006 Redemption Account and applied to the redemption of 2006A Bonds or, upon the District obtaining an opinion of nationally recognized bond counsel to the effect that such application will not adversely affect the tax-exempt status of the 2006A Bonds, be used for any other lawful purpose of the District. The following term has the following meaning: "2006 Reserve Account Requirement" shall mean the lesser of: (A) the Maximum Annual Debt Service Requirement for all Outstanding 2006A Bonds, (B) 125% of the average annual debt service for all Outstanding 2006A Bonds, or (C) 10% of the proceeds of the 2006A Bonds, in each case calculated as of the date of original issuance thereof. Revenue Fund The Trustee is authorized and directed pursuant to the Indenture to establish within the Revenue Fund, a 2006 Revenue Account. (a) The Trustee shall deposit into the 2006 Revenue Account any and all amounts required to be deposited therein by Section 407 of the Second Supplemental Indenture or by any other provision of the Indenture, and any other amounts or payments specifically designated by the District pursuant to a written direction or by a Supplemental Indenture for said purpose. The 2006 Revenue Account shall be held by the Trustee separate and apart from all other Funds and Accounts held under the Indenture and from all other moneys of the Trustee. (b) The District shall deposit 2006 Assessment Revenues with the Trustee immediately upon receipt together with a written accounting setting forth the amounts of such 2006 Assessment Revenues in the following categories which shall be deposited by the Trustee into the Funds and Accounts established under the Second Supplemental Indenture as follows: 20

27 (i) 2006 Assessment Principal, which shall be deposited into the 2006 Sinking Fund Account; (ii) 2006 Prepayment Principal, which shall be deposited into the 2006 Prepayment Subaccount in the 2006 Redemption Account; (iii) 2006 Delinquent Assessment Principal, which shall first be applied to restore the amount of any withdrawal from the 2006 Reserve Account to pay the principal of 2006A Bonds, and, the balance, if any, shall be deposited into the 2006 Sinking Fund Account; (iv) Delinquent Assessment Interest, which shall first be applied to restore the amount of any withdrawal from the 2006 Reserve Account to pay the interest on 2006A Bonds and, the balance, if any, deposited into the 2006 Revenue Account; and (v) all other 2006 Assessment Revenues, which shall be deposited into the 2006 Revenue Account. Moneys other than 2006 Assessment Revenues, shall, at the written direction of the District be deposited into the Optional Redemption Subaccount of the 2006 Redemption Account and used to pay the principal of and premium, if any, on 2006A Bonds called or to be called for redemption at the written direction of the District in accordance with the provisions for redemption of 2006A Bonds as set forth in the Second Supplemental Indenture. (c) On each March 15 and September 15 (or if such March 15 or September 15 is not a Business Day, on the Business Day next preceding such day), the Trustee shall determine the amount on deposit in the 2006 Prepayment Subaccount of the 2006 Redemption Account and, if the balance therein is greater than zero, shall transfer from the 2006 Revenue Account for deposit into such 2006 Prepayment Subaccount, an amount sufficient to increase the amount on deposit therein to an integral multiple of $5,000, and, shall thereupon give notice and cause the extraordinary mandatory redemption of the corresponding 2006A Bonds on the next succeeding Interest Payment Date in the maximum aggregate principal amount for which moneys are then on deposit in the 2006 Prepayment Subaccount in accordance with the provisions for extraordinary redemption of the 2006A Bonds set forth in the Indenture. (d) Subject to the following clause FIRST, on each May 1 (or if such May 1 is not a Business Day, on the Business Day preceding such May 1), the Trustee shall transfer from amounts on deposit in the 2006 Revenue Account to the Funds and Accounts designated below, the following amounts in the following order of priority: FIRST, from the 2006 Revenue Account to the 2006 Interest Account of the Debt Service Fund, an amount equal to the amount of interest payable on all 2006A Bonds then Outstanding on such May 1 or the next successive November 1, less any amount transferred from the 2006 Capitalized Interest Account in accordance with the Second Supplemental Indenture and less any other amount already on deposit in the 2006 Interest Account not previously credited; 21

28 SECOND, (i) beginning on May 1, 2008, and no later than the Business Day next preceding each May 1 thereafter while 2006A Bonds remain Outstanding, to the 2006 Sinking Fund Account, an amount equal to the principal amount of the 2006A Bonds subject to mandatory sinking fund redemption on such May 1 or maturing on such May 1, less any amount on deposit in the 2006 Sinking Fund Account not previously credited; THIRD, to the 2006 Reserve Account, the amount, if any, which is necessary to make the amount on deposit therein equal to the 2006 Reserve Account Requirement with respect to the 2006A Bonds; and FOURTH, the balance shall be retained in the 2006 Revenue Account. Anything in the Second Supplemental Indenture to the contrary notwithstanding, it shall not, a fortiori, constitute an Event of Default under the Second Supplemental Indenture if the full amount of the foregoing deposits are not made due to an insufficiency of funds therefor. (e) Within ten (10) Business Days after the last Interest Payment Date in each calendar year, the Trustee shall, at the written direction of the District, withdraw any moneys held for the credit of the 2006 Revenue Account which are not otherwise required to be deposited to other 2006 Pledged Funds and Accounts pursuant to the Second Supplemental Indenture and deposit such moneys first to the credit of the 2006 Rebate Account in the amount, and to the extent necessary, so the amount on deposit therein equals the accrued rebate obligation under Section 148(f) of the Code, and secondly, if the Trustee has received a certification from the District by such date detailing the amount of such obligation which shall be deposited and thereafter to the District to be used to pay the operating and administrative costs and expenses of the District; provided, however, that on the date of such proposed transfer the amount on deposit in the 2006 Reserve Account shall be equal to the 2006 Reserve Account Requirement and, provided further, that the Trustee shall not have actual knowledge of an Event of Default under the Indenture relating to any of the 2006A Bonds, including the payment of Trustee s fees and expenses then due. (f) Anything in the Indenture to the contrary notwithstanding, earnings on investments in all of the Funds and Accounts held as security for the 2006A Bonds shall be invested only in 2006 Investment Obligations, and further, earnings on the 2006 Acquisition and Construction Account and the subaccounts therein shall be retained, as realized, in such Accounts or subaccounts and used for the purpose of such Account or subaccount. Earnings on investments in the 2006 Sinking Fund Account and the 2006 Redemption Account shall be deposited, as realized, to the credit of the 2006 Revenue Account and used for the purpose of such Account. Earnings on investments in the 2006 Reserve Account shall be disposed of as follows: (i) if there was no deficiency (as defined in Section 509 of the Master Indenture) in the 2006 Reserve Account as of the most recent date on which amounts on deposit in such 2006 Reserve Account were valued by the Trustee, and if no withdrawals have been made from such 2006 Reserve Account since such date which have created a deficiency, then earnings on investments in such 2006 Reserve Account shall, through 22

29 November 1, 2007 be deposited into the 2006 Capitalized Interest Account, and thereafter, into the 2006 Revenue Account; and (ii) if as of the last date on which amounts on deposit in a 2006 Reserve Account were valued by the Trustee there was a deficiency (as defined in Section 509 of the Master Indenture) in such 2006 Reserve Account, or if after such date withdrawals have been made from the 2006 Reserve Account and have created such a deficiency, then earnings on investments in the 2006 Reserve Account shall be deposited to the credit of the 2006 Reserve Account until the amount on deposit therein equals the 2006 Reserve Account Requirement and thereafter shall, through November 1, 2007, be deposited into the 2006 Capitalized Interest Account and, after November 1, 2007, be deposited into the 2006 Revenue Account. Rebate Fund The Trustee is authorized and directed to establish a 2006 Rebate Account. The Trustee shall deposit moneys in the 2006 Rebate Account as required to be deposited therein pursuant to the Second Supplemental Indenture. BONDHOLDERS RISKS Certain risks are inherent in an investment in obligations secured by assessments issued by a public authority or governmental body in the State. Certain of these risks are described in the preceding section entitled "ENFORCEMENT OF ASSESSMENT COLLECTIONS," however, certain additional risks are associated with the 2006A Bonds offered hereby. This section does not purport to summarize all risks that may be associated with purchasing or owning the 2006A Bonds and prospective purchasers are advised to read this Limited Offering Memorandum in its entirety for a more complete description of investment considerations relating to the 2006A Bonds. (1) Until further development takes place on the benefited land within the District, payment of a significant portion of the 2006 Assessments is dependent upon their timely payment by the Developer (as defined herein). At closing of the sale of the 2006A Bonds it is expected that the majority of the land within the District burdened by the 2006 Assessments will continue to be owned either directly or indirectly by the Developer or its affiliates. In the event of the institution of bankruptcy or similar proceedings with respect to the Developer or its affiliates or any other subsequent significant owner of property within the District, delays will most likely occur in the payment of Debt Service on the 2006A Bonds as such bankruptcy could negatively impact the ability of: (i) the Developer and any other land owner being able to pay the 2006 Assessments; (ii) the County to sell tax certificates in relation to such property; and (iii) the District to foreclose the lien on the 2006 Assessments if tax certificates are not sold (in the case of (ii) or (iii) above, to the extent that any portion of the 2006 Assessments are being collected by the Uniform Method of collection). In addition, the remedies available to the Beneficial Owners of the 2006A Bonds upon an Event of Default under the Indenture are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, during a bankruptcy of the 23

30 Developer, the remedies specified by federal, state and local law and in the Indenture and the 2006A Bonds, including, without limitation, enforcement of the obligation to pay the 2006 Assessments may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the 2006A Bonds (including Bond Counsel s approving opinion) will be qualified as to the enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. The inability, either partially or fully, to enforce remedies available respecting the 2006A Bonds could have a material adverse impact on the interest of the Beneficial Owners thereof. (2) The principal security for the payment of the principal of and interest on the 2006A Bonds is the timely collection of the 2006 Assessments. The 2006 Assessments do not constitute a personal indebtedness of the owners of the land subject thereto, but are secured only by a lien on such land. The Developer expects to proceed in its normal course of business to develop homes to sell to retail buyers and develop commercial space to be served by the 2005 Project (as defined herein). There is no assurance that the subsequent owners of this land will be able to pay the 2006 Assessments or that they will pay such 2006 Assessments even though financially able to do so. Beyond legal delays that could result from bankruptcy, the ability of the County to sell tax certificates will be dependent upon various factors, including the interest rate which can be earned by ownership of such certificates and the value of the land which is the subject of such certificates and which may be subject to sale at the demand of the certificate holder after two years. The determination of the benefits to be received by the land within the District as a result of implementation and development of the 2005 Project is not indicative of the realizable or market value of the land, which value may actually be higher or lower than the assessment of benefits. In other words, the value of the land could potentially be ultimately less than the special assessment debt associated with it. To the extent that the realizable or market value of the land is lower than the assessment of benefits, the ability of the County to sell tax certificates relating to such land may be adversely affected. Such adverse effect could render the District unable to collect Delinquent Assessments, if any, and could negatively impact the ability of the District to make the full or punctual payment of Debt Service on the 2006A Bonds. The payment of the annual 2006 Assessments and the ability of the Tax Collector to sell tax certificates or the District to foreclose the lien of the unpaid taxes, including the 2006 Assessments, may be limited by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the State relating to court foreclosure. Bankruptcy of a property owner will most likely also result in a delay by the Tax Collector or the District in prosecuting court foreclosure proceedings. Such delay would increase the likelihood of a delay or default in payment of and interest on the 2006A Bonds. (3) The proposed Development may be affected by changes in general economic conditions, fluctuations in the real estate market and other factors beyond the control of the Developer. In addition, the proposed Development is subject to comprehensive federal, state, and local regulations and future changes to such regulations. Approval is required from various public agencies in connection with, among other things, the design, nature and extent of required public improvements, both public and private, and construction of the 2005 Project in accordance with applicable zoning, land use and environmental regulations for the Development. Although no delays are anticipated, failure to obtain any such approvals in a timely manner could delay or adversely affect the Development, which may negatively impact the Developer s desire 24

31 or ability to develop the Development as contemplated. See "APPENDIX C - ENGINEER S REPORT" attached hereto for a discussion of permits and approvals. (4) The willingness and/or ability of an owner of land within the District to pay the 2006 Assessments could be affected by the existence of other taxes and assessments imposed upon the land by the District or by the County, or by other public entities which may be affected by the value of the land subjected to such taxation and assessment. Under the Uniform Method, County, municipal, school, special district taxes and assessments, and voter-approved ad valorem taxes levied to pay principal of and interest on bonds, including the 2006 Assessments if collected pursuant to the Uniform Method, are payable at one time. As referenced above, if a taxpayer does not make complete payment, he or she cannot designate specific line items on the tax bill as deemed paid in full. In such case, the Tax Collector does not accept such partial payment. Therefore, any failure to pay any one line item, whether or not it be the 2006 Assessments, would cause the 2006 Assessments not to be collected to that extent, which could have a significant adverse impact on the District s ability to make full or punctual payment of Debt Service on the 2006A Bonds. Public entities whose boundaries overlap those of the District, such as the County and the County school district, could, without the consent of the owners of the land within the District, impose additional taxes or assessments on the property within the District. The District has no control over the amount of taxes or assessments levied by governmental entities other than the District. The lien of the 2006 Assessments is, however, of equal dignity with the liens for State and County and certain taxes upon land. As referenced herein, the District may also impose additional assessments which could encumber the property burdened by the 2006 Assessments. (5) There is no assurance that a liquid secondary market will exist for the 2006A Bonds in the event an Owner thereof determines to solicit purchasers of the 2006A Bonds. Even if a liquid secondary market exists, as with any marketable securities, there can be no assurance as to the price for which the 2006A Bonds may be sold. Such price may be lower than that paid by the current Owner of the 2006A Bonds, depending on the progress of the Development, existing real estate and financial market conditions and other factors. (6) The Engineer's estimated cost of the 2005 Project is approximately $31,329,312, of which approximately $21,656,750 in land and existing infrastructure was acquired by the District at the time the 2005 Notes were issued. The Engineer estimates the cost of the new improvements included in the 2005 Project is approximately $9,672,552 of which approximately $824,000 has been constructed by the District. The balance of the proceeds of the 2005 Notes after the application thereof to pay the principal of and interest on the 2005 Notes is expected to be approximately $5,866, The Developer has agreed to fund the remaining amount of the 2005 Project pursuant to the Completion Agreement, however, that obligation is unsecured. (7) Prospective Bondholders should note that although the Indenture contains a 2006 Reserve Account Requirement (the "2006 Reserve Account Requirement") for the 2006 Reserve Account (the "2006 Reserve Account"), and a corresponding obligation on the part of the District to replenish the 2006 Reserve Account to the 2006 Reserve Account Requirement, if in fact that account is accessed for any purpose, the District does not have a designated revenue source for replenishing that fund. Moreover, the District will not be permitted to re-assess real property 25

32 then burdened by the 2006 Assessments in order to provide for the replenishment of the Debt Service Reserve Fund. (8) Owners should note that several mortgage lenders have, in the past, raised legal challenges to the primacy of the liens similar to those of the 2006 Assessments in relation to the liens of mortgages burdening the same real property; to the best knowledge of the District (without investigation), in all such cases to date, the applicable courts have held that the assessment liens (like those of the 2006 Assessments) are superior to those of the commercial mortgage lenders. The Developer will certify that there are no mortgages encumbering the land within the District secured by the 2006 Assessments which have not acknowledged the statutory superiority of the lien of the 2006 Assessments. (9) The interest rate borne by the 2006A Bonds is, in general, higher than interest rates borne by other bonds of political subdivisions that do not involve the same degree of risk as investment in the 2006A Bonds. These higher interest rates are intended to compensate investors in the 2006A Bonds for the risk inherent in a purchase of the 2006A Bonds. However, such higher interest rates, in and of themselves, increase the amount of 2006 Assessments that the District must levy in order to provide for payments of debt service on the 2006A Bonds, and, in turn, may increase the burden upon owners of lands within the District. (10) Various proposals are mentioned from time to time by members of the Congress of the United States of America and others concerning reform of the internal revenue (tax) laws of the United States. Certain of these proposals, if implemented, could have the effect of diminishing the value of obligations of states and their political subdivisions, such as the 2006A Bonds, by eliminating or changing the tax-exempt status of interest on certain of such bonds. Whether any of such proposals will ultimately become law, and if so, what effect such proposals could have upon the value of bonds such as the 2006A Bonds, cannot be predicted. The Indenture does not provide for any adjustment to the interest rates borne by the 2006A Bonds in the event of a change in the tax-exempt status of the 2006A Bonds. (11) The District is required to comply with statutory procedures in levying the 2006 Assessments. Failure of the District to follow these procedures could result in the 2006 Assessments not being levied or potential future challenges to such levy. District Counsel has, however, rendered a legal opinion as to the levy process and the enforceability of the 2006 Assessments. See "SECURITY FOR AND SOURCE OF PAYMENT FOR THE 2006A BONDS" herein. (12) While the District has represented to the Underwriter that it has selected its manager, financial advisor, counsel, engineer, corporate trustee and other professionals with the appropriate due diligence and care, and while the foregoing professionals have each represented in their respective areas as having the requisite expertise to accurately and timely perform the duties assigned to them in such roles, the Underwriter does not guaranty any portion of the performance of these professionals. Failure on the part of any one of these professionals to perform their obligations could result in a delay in payment on the 2006A Bonds, and in the worst possible situation, the non-payment of the 2006A Bonds. 26

33 This section does not purport to summarize all risks that may be associated with purchasing or owning the 2006A Bonds and prospective purchasers are advised to read this Limited Offering Memorandum in its entirety (inclusive of Appendices) for a more complete description of investment considerations relating to the 2006A Bonds. Legal Powers and Authority THE DISTRICT The District is an independent unit of local government created in accordance with the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended (the "Act"). The Act was enacted to provide a uniform method for the establishment of independent districts to manage and finance basic community development services, including capital infrastructure required for community developments throughout the State. The Act provides legal authority for community development districts (such as the District) to finance the acquisition, construction, operations and maintenance of the major infrastructure for community development. The Act provides that community development districts have the power to issue general obligation, revenue and special assessment bonds in any combination to pay all or part of the cost of infrastructure improvements authorized under the Act. The Act further provides that community development districts have the power to levy and assess taxes, including special assessments, on all taxable real and tangible personal property within their boundaries to pay the principal of and interest on bonds issued and to provide for any sinking or other funds established in connection with any such bond issues. Pursuant to the Act, such special assessments shall be assessed, levied and collected in the same manner and time as county taxes. Among other provisions, the Act gives the Board the right to: (i) hold, control, and acquire by donation, purchase, condemnation, or dispose of, any public easements, dedications to public use, platted reservations for public purposes, or any reservations for those purposes authorized by the Act and to make use of such easements, dedications, or reservations for any of the purposes authorized by the Act; (ii) finance, fund, plan, establish, acquire, construct or reconstruct, enlarge or extend, equip, operate and maintain systems and facilities for various basic infrastructures, including district roads equal to or exceeding the specifications of the county in which such district roads are located, facilities for indoor and outdoor recreational, cultural and educational uses, and any other project within or without the boundaries of the District when a local government has issued a development order approving or expressly requiring the construction or funding of the project by the District, or when the project is the subject of an agreement between the District and a governmental entity and is consistent with the local government comprehensive plan of the local government within which the project is to be located; (iii) borrow money and issue notes of the District; and (iv) exercise all other powers necessary, convenient, incidental, or proper in connection with any of the powers or duties of the District stated in the Act. The Act does not empower the District to adopt and enforce land use plans or zoning ordinances, and the Act does not empower the District to grant building permits; these functions 27

34 are performed by the County, acting through its Board of County Commissioners and its departments of government. Board of Supervisors The Act provides for a five member Board to serve as the governing body of the District. Members of the Board ("Supervisors") must be residents of the State and citizens of the United States. Initially, the Supervisors are appointed pursuant to the Act, until an election is advertised. Following advertisement, the Supervisors are elected on an at-large basis by the owners of the property within the District. The Developer, who will be the majority owner of all the benefited property within the District at the time of the at-large election, will probably determine the composition of the future Board. Ownership of land within the District initially entitles the owner to one vote per acre (with fractions thereof rounded upward to the nearest whole number). Each Supervisor serves until expiration of his or her term and until his or her successor is chosen and qualified. If, during a term of office, a vacancy occurs, a majority of the remaining Supervisors may fill the vacancy by an appointment of an interim Supervisor for the remainder of the unexpired term. The landowners in the District elect two Supervisors to four-year terms and three Supervisors to two-year terms at bi-annual (i.e., once every two years) elections. After the first election of the Board, the next election by landowners will be the first Tuesday in the applicable November. Thereafter, the elections will take place every two years on a date in November established by the Board. Until the later of six years after the initial appointment of Supervisors or the year when the District attains at least 250 qualified electors, Supervisors whose terms are expiring will begin to be elected (as their terms expire) by qualified electors of the District. A qualified elector is a registered voter who is a resident of the District and the State and a citizen of the United States. At the election where Supervisors are first elected by qualified electors, two Supervisors must be qualified electors and be elected by qualified electors, both to four-year terms. The other Supervisor will be elected by landowners to a four-year term and is not required to be a qualified elector. Thereafter, as terms expire, all Supervisors must be qualified electors and be elected by qualified electors to serve staggered terms for terms of four years. Notwithstanding the foregoing, if at any time the Board proposes to exercise its ad valorem taxing power, prior to the exercise of such power it shall call an election at which all Supervisors shall be elected by qualified electors of the District. Elections subsequent to such decision shall be held in a manner such that the Supervisors will serve four-year terms with staggered expiration dates in the manner set forth in the Act. The Act provides that it shall not be an impermissible conflict of interest under State law governing public officials for a Supervisor to be a stockholder, officer or employee of a landowner. 28

35 The current members of the Board and their terms of office are set forth below: Name Title Term Expires David Schwarz Chairman November 2009 Gary Schwarz Vice Chairman November 2009 Darcy Edwards Assistant Secretary November 2007 James Dempsey Assistant Secretary November 2007 Bruce Zaniol Member November 2007 All Board members are employees of the Developer or its affiliates. A majority of the Supervisors constitutes a quorum for the purposes of conducting the business of the District and exercising its powers and for all other purposes. Action taken by the District shall be upon a vote of a majority of the Supervisors present unless general law or a rule of the District requires a greater number. All meetings of the Board are open to the public under the State's open meetings or "sunshine" law. The Act authorizes the Board to hire such employees and agents as it may determine necessary. GrayRobinson, P.A., Orlando, Florida, serves as counsel to the District. The District has retained Ruden, McClosky, Smith Schuster & Russell, P.A., Fort Lauderdale, Florida as Bond Counsel. The District has retained Fishkind & Associates, Inc., Orlando, Florida as District Manager and as Financial Advisor. The Financial Advisor will prepare the assessment roll. The District Manager The Act authorizes the Board to hire a district manager as the chief administrative official of the District. The Act provides that such district manager shall have charge and supervision of the works of the District and shall be responsible for (i) preserving and maintaining any improvement or facility constructed or erected pursuant to the provisions of the Act, (ii) maintaining and operating the equipment owned by the District, and (iii) performing such other duties as may be prescribed by the Board. The chief administrative official of the District is the District Manager. The District has hired Fishkind & Associates to serve as District Manager to the District (the "District Manager"). The Act provides that the District Manager shall have charge and supervision of the works of the District and is responsible for preserving and maintaining any improvement or facility constructed or erected pursuant to the provisions of the Act, for maintaining and operating the equipment owned by the District, and for performing such other duties as may be prescribed by the Board. The office of the District Manager is located at Corporate Boulevard, Orlando, Florida 32817, and the telephone number is (407)

36 The primary focus of the District Manager since 1989 has been to provide financial advisory and management services to establish, finance, and manage community development districts. To date, the firm has been involved with over 50 districts throughout the State and more than 100 successful financings totaling over $1.5 billion in infrastructure improvements and currently manages five (5) districts. Outstanding Indebtedness The 2006A Bonds are the second series of securities to be issued by the District, which has previously issued its 2005 Notes for the acquisition of land and the acquisition and/or construction and installment of certain master infrastructure improvements comprising the 2005 Project. The 2005 Notes mature on December 1, A portion of the proceeds of the 2006A Bonds, together with the proceeds of the 2005 Notes on deposit with the Trustee, will be used to redeem and retire the outstanding principal amount of the 2005 Notes and all interest accrued thereon on the date of issuance of the 2006A Bonds. The District has no other outstanding indebtedness. THE 2005 PROJECT The Engineer's Report estimates the cost of the 2005 Project is $31,329,912, which includes $14,116,375 of costs for related interests in the land. Please refer to "APPENDIX C - ENGINEER S REPORT" attached hereto for a more detailed description of the 2005 Project. The following information appearing below under the caption "THE DEVELOPMENT" and "THE DEVELOPER" has been furnished by the Developer for inclusion in this Limited Offering Memorandum and, although believed to be reliable, such information has not been independently verified by the District or its counsel, or the Underwriter or its counsel, and no person other than the Developer makes any representation or warranty as to the accuracy or completeness of such information supplied by the Developer. General THE DEVELOPMENT Clearwater Cay (the "Development") encompasses approximately 49 acres overlooking Tampa Bay and the Bayside Bridge from its eastern boundary on the western shore of upper Tampa Bay. The project is also located on US 19 along the western boundary. Clearwater Cay is located approximately 30 minutes from downtown Tampa and 20 minutes from the Tampa International Airport. The Development is being developed by DC701, LLC, a Florida limited liability company, and other entities owned or controlled by its members (the "Developer"). The managers of DC701 are Mr. Dave Clark and Mr. David Schwarz, who also own or control the members of DC701. Clearwater Cay is being designed as a luxury, regional resort destination attracting local, national, and international buyers. The Development consists of existing residential and commercial uses, including a 336-unit condominium complex and a 150,000 square foot office 30

37 building. In addition to the existing development, the Developer plans to offer 382 residential villa units, 382 hotel-condominium units, 150,000 square feet of retail space, 200 boat slips, parking, and recreational facilities. The Development consists of three main development parcels: The Grand Venezia at Baywatch Condominium, Harbourside Office Building, and the Commonwealth Parcel. The Grand Venezia parcel consists of 24.1 acres, on which 12 mid-rise condominium buildings are located with a total of 336 existing condominium units. Harbourside consists of approximately 9 acres and currently consists of a mid-rise office building with approximately 150,000 square feet of office space. The third parcel, the Commonwealth Parcel, consists of a 16.3 acre site that previously contained a shopping center and office building. All three parcels are to be redeveloped into a Venetian theme consistent with the existing Grand Venezia parcel. Recreational Amenities and Design Clearwater Cay will be a highly amenitized community, which will include villas dedicated to social and recreational pursuits, boat slips, lighted waterfront promenade, waterside entertainment, lighted championship tennis facility, competition sand volleyball courts, children s playground, and picnic areas. The social and recreational villas will include a pool with water volleyball, lounge and dining facilities, heated soothing spa, health and fitness spa, men s and women s locker rooms and pool baths, as well as an executive business center. The boat slips will be able to accommodate up to 50 foot yachts, with boatlifts, and will have water and electric service. The Development will be developed under the following design scheme: The Lagoon and the Canal The Development is intended to be a regional destination attracting local, national, and international users. The new plan introduces a new shallow fresh water basin and small canal system that, while not connected to the brackish Clearwater Bay, it will give the impression that a water network is the location s integral component. Around this new lagoon (Lagoon di Alba) new Venetian inspired themed structures will contain a spa, new residences, shops, support structured parking, offices and hotel-condominium units. The canal is to be built running south to north. It will be spanned in two places by small Venetian bridges that will give access to the east side of the Lagoon. These bridges contain archways of sufficient height and breadth to allow for the passing of a gondola, which will be provided as one of the central themes of the Development. The canal will enter the Lagoon under one of these brick or stone faced bridges. Around the edge of the Lagoon will run the Cammino degli Andanti - or Pedestrian Promenade - a walk way and strolling area which will be illuminated at night by appropriate cast iron street lanterns. Restaurants and shops face the lake. There is sufficient plaza dimension to extend some of the restaurants into outdoor tables and chairs. 31

38 Galleria Utilizing the southern footprint of the mall that previously existed on the Commonwealth Property, and any of its support structure that could be retained, an extended gallery of smart shop units will be developed using Venetian city design principles. Three stories high, with ceramic barrel tile roof and faux Venetian flared chimneys above, the Galleria can be accessed from Via Veneto, or from several pedestrian only passigiata passageways through the building, or from the canal side to the east. A projecting arcade that is a sunscreen during the summer months will protect the façade of the Galleria on the east side. Hotel/Condominium A five-story hotel/condominium is planned as the central anchor of the project. The intended footprint overlays the center and north part of the mall demolished to provide the new footings. A porte cochere and valet drop off will be provided on the west side along the Via Veneto, or from the Piazza Minore, one of two traffic circles. Relationship with Cove Cay Country Club In addition, the Developer has entered into an agreement with the owner of Cove Cay Country Club which will permit residents and guests within the Development to use its golf and country club facilities, thereby enhancing the amenities the Development is able to offer. The Cove Cay Country Club is located just to the South of the Development across the canal. Access is available to those facilities either by road (US 19) or by boat across the channel from the Development to Cove Cay Country Club Marina. The Developer has negotiated a ten year lease of the Cove Cay Country Club Marina with an option to purchase, which the Developer plans on exercising. The marina will be integrated into the Development and a ferry service established to create a convenient and unique means of accessing the golf and country club facilities at the Cove Cay Country Club. Land Acquisition and Financing The land within the Development is owned by entities controlled by the Developer and/ or its members and which are related to Dave Clark. Provided below is a summary of the ownership structure of each main parcel. The Grand Venezia parcel was purchased by DC703, LLC, a Florida limited liability company in To date, 330 condominiums have been sold. The remaining units are under contract. The Grand Venezia parcel is not encumbered by a mortgage. Harbourside is currently owned by Miranda Office Partners Clearwater, LLC, an Illinois limited liability company ("Miranda"). The Developer, or an affiliate, is currently under contract to purchase Harbourside from Miranda for $19,000,000 in a related party transaction. Once this transaction closes, the Developer will complete the process of creating an office condominium at the property and will begin selling office condominiums in The sale is scheduled to close on or before December 14,

39 The Commonwealth Parcel was purchased in September 2005 by DC702, LLC a Florida limited liability company ("DC702") and DC703OB, LLC a Florida limited liability company ("DC703OB") for a total amount of $12,692, DC702 owns the former site of the shopping center and DC703OB owns the small office building located within the Commonwealth Parcel site. DC701 LLC, a Florida limited liability company, or its members own 100% of the equity in both DC702 and DC703OB. DC702 and DC703OB obtained a $20,000, revolving line of credit loan from Orion Bank which is secured by a 1st mortgage on the small office building, the Shopping Center, approximately 25 condominium units located in The Grand Bellagio at Baywatch condominium complex located adjacent to and east of the Commonwealth Parcel, and 6 condominium units within The Grand Venezia. The Orion Bank loan bears a fixed rate, is paid monthly, has maturity date of December 22, 2006 and is currently outstanding in the approximate amount of $16,000, This is a long term revolving lending facility and the Developer plans on renewing it and continuing to use it in connection with its operations. Developer Equity The Developer has invested approximately $11,000,000 in equity invested in the Development to date. Zoning and Development Approvals The Grand Venezia portion of the Development is zoned Medium Density Residential (MDR) by the City while the remainder of the Development is zoned Commercial (C). The Grand Venezia received site plan and development plan approval in The Harbourside received all necessary site plan and development approval for the construction of the office building prior to its construction. The Commercial zoning on the Shopping Center permits the development of, without the use of any variations, 650 overnight accommodations/ condominium hotel units at that site. In addition, support facilities such as a hotel restaurant, meeting rooms, health spa, swimming pools, clubhouse/cabanas, tennis courts, fitness rooms, hotel management and back-of-house storage and operation facilities are permitted. There are no restrictions on the size of the hotel rooms that could be constructed provided that the maximum floor area ratio, impervious surface ratio, maximum building height and other setback and side yard requirements are not exceeded and the required on-site parking is achieved with structured parking and/or surface parking areas. The Developer s concept plans for the Development include the development of an additional 150,000 square feet of retail space on the Commonwealth Parcel and an additional 114 hotel/condo units above what is currently permitted. Based on preliminary meetings with Michael Delk, Planning Director and Mahshid Arasteh, Public Works Directors of the City of Clearwater, the Cristal Clear Companies, entities controlled by Mr. Clark, were encouraged to approach the redevelopment of the project by pursuing a Level Three Application. The approach involves slightly more time and additional negotiations with the City of Clearwater staff and requires the review by the Development Review Committee (DRC), Community Development Board (CDB), and the City Council. However, at the completion of this process, the Developer will have a binding development order with stipulated uses and variations above and beyond the (C) Commercial General land use classification. The Level Three Application has been 33

40 submitted to the City of Clearwater Staff and the Developer is continuing discussions with the City to complete the approval process. District Infrastructure and Finance Plan The District will provide facilities and services, which will include roadways, streets and associated surface water management facilities, utilities, landscaping and parking and recreational facilities. The total cost of the 2005 Project is estimated to be $31,329,312. The District acquired land and existing infrastructure included in the 2005 Project at the time of issuance of the 2005 Notes. The new improvements included in the 2005 Project are estimated to cost approximately $9,672, (of which approximately $824,000 of the proceeds of the 2005 Notes has been expended) and is set forth in Table 2 of the Engineers Report. See "APPENDIX C - ENGINEERS REPORT" attached hereto. As noted in the Engineer s Report, in addition to infrastructure costs, the District has funded $14,116, in land acquisition costs as part of the 2005 Project. The District acquired lands necessary to operate, maintain, and or provide access to certain improvements, included in the 2005 Project. New improvements included in the 2005 Project are expected to be substantially complete by June The Engineer's Report also describes certain additional projects to serve the Development which may be financed by the District in the future through the issuance of Bonds (the "Future Projects"). Any portion of the 2005 Project not funded with proceeds of the 2005 Notes and all or any portion of the Future Projects not financed by the District will be completed by the Developer and conveyed to the District, however, that obligation is unsecured. For a more detailed description of the improvements financed by the 2005 Notes and permitting status, see "APPENDIX C - ENGINEER S REPORT" attached hereto. Financing Plan It is the intent of the District to issue the 2006A Bonds for the purpose of retiring the 2005 Notes. The District has approved a Master Assessment Methodology, as supplemented by the Final Supplemental Assessment Methodology attached hereto as Appendix D (the "Assessment Methodology") to illustrate the proposed allocation for the assessments related to such proposed 2006A Bonds, based upon the cost estimates contained in the Engineers Report attached hereto as Appendix C. As referenced in the Assessment Methodology, the 2006A Bonds are to be secured by the 2006 Assessments burdening all land in the District. The 2006 Assessments will be the primary security for the 2006A Bonds. 34

41 Residential Development The Developer plans to continue to sell and construct condominium units and condo/hotel units in the Development. Clearwater Cay is planned to offer approximately 1,100 residential units including one, two, and three bedroom residences spanning from 890 square feet to over 1,870 square feet. The Developer anticipates base unit prices ranging from $259, to $1,059, depending on size, location and amenities of the home. The Developer has closed on approximately 330 of the existing 336 condominiums with an average selling price of approximately $588, The following table reflects the Developers current expectations of the approximate mix of residential units planned to be constructed in the Development and their respective prices and square footage, although there can be no assurance that development will occur as projected. Proposed Product Mix Product Type Units Est. Square Feet Target Price/Unit Grand Venezia Condo* 336 2,450 $300,000 - $1,000,000 Villas 382 1, ,000 Hotel-Condominiums 382 1, ,000 * Units may be leased for seasonal use. Commercial Development The Commonwealth Parcel The Developer plans to continue the Venetian theme with the redevelopment of the Commonwealth Parcel. The commercial development is planned within the Commonwealth parcel to include 150,000 square feet of retail space and parking structures. It will be developed under the following design scheme: The Development will retain an Italian theme and reinforce Italian character with a more authentic Venetian inspired architectural approach to new buildings that will be reflected by the careful attention to proportion, style, material use and graphic-architectural detailing. Harbourside Property As referenced herein, the Harbourside Property contains a 150,000 square foot office building, which is leased to a variety of tenants. Once acquired from Miranda, the Developer will convert this property to office condominiums and sell these office units. On a portion of the Property that is currently owned by the District, the District intends to construct a water park as an additional amenity. 35

42 Projected Absorption The Developer projects that all of the units will be absorbed over a five-year period as depicted in the table below: Product Type Total Grand Venezia New Residential Office Condominiums Retail Condominiums TOTAL ,124 The Developer envisions starting construction of the New Residential, Office Condominiums and Retail Condominiums in the third quarter of The foregoing anticipated absorption rates are based upon estimates and assumptions made by the Developer that are inherently uncertain, though considered reasonable by the Developer, and are subject to significant business, economic and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of the Developer. As a result, there can be no assurance such absorption rates will occur or be realized in the time frames anticipated. Marketing Advertising for the Development is a multi-faceted effort including, but not limited to, local newspaper, television and radio, billboards, local and national magazines, the Internet, local realtors and referrals from current residents. The Developer anticipates offering a variety of product types to families, retirees and vacationers. The Developer expects potential buyers to have an annual income in excess of $500K looking for a secondary residence primarily for investment and vacation purposes. The demographic is typically an active club lifestyle enthusiast who prefers coastal living, is water sports oriented and aged All marketing efforts for Clearwater Cay will be coordinated through Cay Clubs. Fees and Assessments All landowners within the District are subject to annual property taxes, special assessments and homeowner s association fees as described in more detail below. For purposes of illustration only, assuming a $600,000 home with a $25,000 homestead exemption ($575,000 taxable value) in Clearwater Cay, based on the millage rates applicable during the fiscal year ended September 30, 2005 (total mills, see note (1) below), the estimated annual aggregate annual costs of taxes, assessments and fees is as follows: 36

43 $500,000 Home/Lot Package Estimated Annual Taxes, Assessments and Fees Ad Valorem Property Taxes $9, (1) 2006 Assessments 1, (2) Maintenance/Operating Special Assessments 0.00 (2) Master Homeowner's and Condo Association Fee 3, (3) Total $14, (1) (2) (3) Source: Pinellas County Property Appraiser Source: District Source: The Developer A master homeowners association, the Clearwater Cay Property Owners Association ("CCPOA"), will govern the Development. In addition, each community will have a separate "homeowners" or "condominium" association to govern its activities. Each of these subassociations will be a member of the CCPOA, with voting rights proportionate to the number of its units. Competition The Developer has performed extensive market research into the marketability of this project and believes this to be a unique offering of resort services and amenities that will be unmatched in this area. The Development is considered by the Developer to be unique because of its product and amenity mix. The nearest comparable project is Bayview Condominiums. Bayview is a luxury waterfront project offering bayfront views with proximity to downtown. Resales, available on a periodic basis, range from $500,000 to over $1 million. THE DEVELOPER As referenced in "THE DEVELOPMENT", the Development is being developed by DC701 and its principals and affiliated entities. DC701 was formed in 2004 and is privately held. The managing members of DC701 are Dave Clark and David Schwarz. Both Mr. Clark and Mr. Schwarz have significant development experience in the state of Florida that has concurrently spanned more than 20 years. Cay Clubs International, another entity controlled by Mr. Clark, is currently involved with five (6) major projects: Clearwater Cay Club, Las Vegas Cay Club, Sarasota Cay Club, IMG Cay Club, Orlando Academy Cay Club and Cay Clubs in the Florida Keys. A brief description of each project is provided below: Clearwater Cay Club As described herein, the Clearwater Cay Club project is located along Clearwater Bay and targets investor and residential purchasers interested in resort style living in a boating and resort community giving access to Tampa Bay, Clearwater Bay and the Gulf of Mexico. 37

44 Las Vegas Cay Club This Project consists of 336 condominium units that were converted from an apartment complex in Approximately 276 units have been sold and the remainder are under contract and the developer expects those to all close by the end of 2006/ first quarter of The price points for these units range from $350,000 to over $800,000. Sarasota Cay Club This Project originally consisted of a Holiday Inn hotel which the Developer converted to 164 condominium hotel units in Approximately 97 units have been sold and the remainder are under contract and the developer expects those to all close by March The price points for these units range from $200,000 to over $500,000. In addition to the destination resort there is also two marinas offering over 100 slips, a dry storage facility, a restaurant and a conference center. IMG Academies Cay Club This Project consists of 48 existing condominium units that were purchased from the developers of the IMG Academy in Bradenton, Florida, and represents the first venture that the Developer has initiated in partnership with IMG Academies and some of its principals. In addition to the existing condominium units, 36 of which have been sold, and additional 24 are scheduled to be constructed over the next 2 years. The remainder of those units that are built are under contract and the Developer expects those to all close by December The price points for these units range from $500,000 to over $800,000. Of the 24 units that are scheduled to be completed in the next 2 years, all of those are under contract for prices beginning at $1,049, and ending at $1,299, These units are scheduled to be constructed and sold no later than March These units are located in the center of the famed IMG Sports Academy and offer unique access to all of the sports facilities and training centers that IMG Academies are known around the world to provide to their guests. Orlando Academy Cay Club This Project represents the second collaboration with IMG and consists of 896 units. The Developer is in the process of converting a large apartment complex to condominium in 4 phases. As part of that process, it will work with IMG to create a sports academy on the existing 44 acre golf course that currently abuts the apartment community. It is this enhancement and amenity that makes this project unique and attractive to buyers. The first phase will consist of 336 condominium units in 16 two and three story buildings on the north edge of an existing golf course. Approximately 200 contracts have been signed for units in Phase One, while the remaining 136 units have been reserved by buyers. Contracts for those units will be entered in the next month or so and closings will begin shortly. The Developer expects to close on the sale of at least 200 units by the end of The price points for these units range from $250,000 to over $500,000. Cay Clubs in the Florida Keys Cay Clubs is currently developing additional projects, including: (i) Marathon Cay Club ultimately a 200 unit destination condominium project offering a 124 slip marina, a waterfront retail fishing village with a seafood market and restaurant, several resort pools and an automated, computerized parking facility. Pricing is expected to start 38

45 at $600,000 to over $1,000,000; (ii) Key Largo Cay Club planned to be a 50 unit residential project, will offer a restaurant, pool, meeting space and a marina currently with 38 slips, to be expanded to 50 slips. Prices are expected to start at $1,000,000 per unit; (iii) Islamorada Cay Club a 55 unit destination condominium project offering a 50 slip marina, a waterfront retail fishing village with a seafood market and tiki bar; (iv) Sombrero Cay Club a 125 unit destination condominium project with 75 wet slips villas, will offer two resort pools, a full feature spa, meeting space, a restaurant and an automated parking facility. Prices are expected to start at $550,000 per unit; and (v) Tavernier Cay Club a state of the art 130 plus slip marina with clubhouse, pool and fueling facilities. Dave Clark - Chief Executive Officer - As the CEO of all related entities, Dave maintains final authority over all matters related to strategic direction, performance evaluation, new ventures, company philosophies and management style. He maintains direct involvement in all operating departments with a particular emphasis on sales, marketing, acquisitions and client relations. Mr. Clark formally served as CEO or President of all EarthMark Companies and related entities from their inception in the late 80's until July 2004 when Cristal Clear Companies and related entities demanded his full attention. He still maintains his ownership stake in all EarthMark Companies entities and projects. In addition to 20 years of real estate development and construction background, Mr. Clark has extensive background in agriculture, environmental mitigation and retail operations. Dave graduated from the University of Central Florida with a degree in Accounting and worked for international CPA firm Ernst & Ernst prior to his entry into real estate. David Schwarz - COO / CFO - Together with the Mr. Clark, Mr. Schwarz assists with strategic planning, feasibility studies, acquisition analysis and policy formation. As Chief Operating Officer, Mr. Schwarz maintains primary responsibility for policy implementation and day-to-day operations for all on-going projects, ventures and businesses. As CFO, Mr. Schwarz directs all financial planning, analysis, compliance and reporting. Mr. Schwarz graduated from Loyola University as a University Fellow in the Honors and Privileged Studies Program and entered public accounting. As a CPA, he spent eight years in Audit and Management Advisory Services and has spent the last 20 years involved in real estate development and construction, including eleven years as CFO and Partner in EarthMark related entities. Mr. Schwarz left EarthMark in 2001 to pursue other interests and only recently rejoined Mr. Clark to pursue the Cay Club concept. TAX MATTERS The Internal Revenue Code of 1986, as amended (the "Code"), includes requirements which the District must continue to meet after the issuance of the 2006A Bonds in order that interest on the 2006A Bonds not be included in gross income for federal income tax purposes. Examples include: the requirement that the District rebate certain excess earnings on proceeds and amounts treated as proceeds of the 2006A Bonds to the United States Treasury; restrictions 39

46 on investments of such proceeds and other amounts; and restrictions on the ownership and use of the facilities financed with the proceeds of the 2006A Bonds. The District s failure to comply with these requirements may cause interest on the 2006A Bonds to be included in gross income for federal income tax purposes retroactive to their date of issuance. The District has covenanted in the Indenture to take all actions required by the Code in order to maintain the exclusion from gross income for federal income tax purposes of interest on the 2006A Bonds. The opinion of Bond Counsel, the form of which is attached hereto as Appendix B, will be based upon and assume the accuracy of certain representations and certifications and is conditioned on compliance by the District with such requirements, and Bond Counsel has not been retained to monitor compliance with requirements such as described above subsequent to the issuance of the 2006A Bonds. The Indenture does not require the District to redeem the 2006A Bonds or to pay any additional interest or penalty in the event the interest on the 2006A Bonds becomes taxable. In the opinion of Bond Counsel, assuming continuing compliance by the District with the tax covenants referred to above, under existing statutes, regulations, rulings and court decisions, interest on the 2006A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax; however, such interest is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on corporations under the Code. Except as described above, Bond Counsel will express no opinion regarding the federal income tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of the 2006A Bonds. Prospective purchasers of 2006A Bonds should be aware that the ownership of 2006A Bonds may result in other collateral federal tax consequences, including (i) the denial of a deduction of interest on indebtedness incurred or continued to purchase or carry 2006A Bonds or, in the case of a financial institution, that portion of the owner s interest expense allocable to interest on a 2006A Bond; (ii) the reduction of the loss reserve deduction for property and casualty insurance companies by 15 percent of certain items, including interest on the 2006A Bonds; (iii) the inclusion of interest on 2006A Bonds in earnings of certain foreign corporations doing business in the United States for purposes of a branch profits tax; (iv) the inclusion of interest on 2006A Bonds in the passive income subject to federal income taxation of certain Subchapter C earnings and profits at the close of the taxable year; and (v) interest on the 2006A Bonds is taken into account in determining whether recipients of Social Security and Railroad Retirements benefits must include a portion of those benefits in gross income. During recent years, legislative proposals have been introduced in Congress, and in some cases enacted, that altered certain federal tax consequences resulting from the ownership of obligations that are similar to the 2006A Bonds. In some cases, these proposals have contained provisions that altered these consequences on a retroactive basis. Such alteration of federal tax consequences may have affected the market value of obligations similar to the 2006A Bonds. From time to time, legislative proposals are pending which could have an effect on both the federal tax consequences resulting from ownership of the 2006A Bonds and their market value. No assurance can be given that additional legislative proposals will not be introduced or enacted that would or might apply to, or have an adverse effect upon, the 2006A Bonds. The Internal Revenue Service (the "IRS") has established an on-going program to audit tax-exempt obligations to determine whether interest on such obligations is includible in gross 40

47 income for federal income tax purposes. Bond Counsel cannot predict whether the IRS will commence an audit of the 2006A Bonds. Owners of the 2006A Bonds are advised that, if the IRS does audit the 2006A Bonds, under current IRS procedures, at least during the early stages of an audit, the IRS will treat the District as the taxpayer, and the owners of the 2006A Bonds may have limited rights to participate in such procedure. The commencement of audit could adversely affect the market value and liquidity of the 2006A Bonds until the audit is concluded, regardless of the ultimate outcome. TAX TREATMENT OF ORIGINAL ISSUE DISCOUNT The 2006A Bonds were sold at prices less than the stated principal amounts thereof (the "Discount Bonds"). The difference between the principal amount of the Discount Bonds and the initial offering price to the public, excluding bond houses and brokers, at which price a substantial amount of such Discount Bonds of the same maturity was sold, is "original issue discount." Original issue discount represents interest which is excluded from gross income for federal income tax purposes to the same extent and subject to the same considerations discussed above as to stated interest on the 2006A Bonds. Such interest is taken into account for purposes of determining the alternative minimum tax liability, and other collateral tax consequences, although the owner of such Discount Bonds may not have received cash in such year. Original issue discount will accrue over the term of a Discount Bond at a constant interest rate compounded on interest payment dates. A purchaser who acquires a Discount Bond in the initial offering at a price equal to the initial offering price thereof will be treated as receiving an amount of interest excludable from gross income for federal income tax purposes equal to the original issue discount accruing during the period such purchaser holds such Discount Bond and will increase its adjusted basis in such Discount Bond by the amount of such accruing discount for purposes of determining taxable gain or loss on the sale or other disposition of such Discount Bond. The federal income tax consequences of the purchase, ownership and redemption, sale or other disposition of Discount Bonds which are not purchased in the initial offering price may be determined according to rules which differ from those described above. Prospective purchasers of Discount Bonds should consult their own tax advisors with respect to the precise determination for federal income tax purposes of interest accrued upon sale, redemption or the disposition of Discount Bonds and with respect to the state and local tax consequences of owning and disposing of Discount Bonds. AGREEMENT BY THE STATE Under the Act, the State pledges to the holders of any bonds issued thereunder, including the 2006A Bonds, that it will not limit or alter the rights of the District to own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects subject to the Act or to levy and collect taxes, assessments, rentals, rates, fees, and other charges provided for in the Act and to fulfill the terms of any agreement made with the holders of such bonds and that it will not in any way impair the rights or remedies of such holders. 41

48 LEGALITY FOR INVESTMENT The Act provides that the 2006A Bonds are legal investments for savings banks, banks, trust companies, insurance companies, executors, administrators, trustees, guardians, and other fiduciaries, and for any board, body, agency, instrumentality, county, municipality or other political subdivision of the State, and constitute securities which may be deposited by banks or trust companies as security for deposits of state, county, municipal or other public funds, or by insurance companies as required for voluntary statutory deposits. SUITABILITY FOR INVESTMENT In accordance with applicable provisions of State law, the 2006A Bonds may be sold by the District only to "accredited investors" as such term is used in the rules of the Florida Department of Financial Services. Such limitation regarding the initial offering does not denote restrictions on transfer in any secondary market for the 2006A Bonds. No dealer, broker, salesman or other person has been authorized by the District or the Underwriter to give any information or make any representations, other than those contained in this Limited Offering Memorandum. Additional information will be made available to each prospective investor, including the benefit of a site visit to the District, and the opportunity to ask questions of the Developer, as such prospective investor deems necessary in order to make an informed decision with respect to the purchase of the 2006A Bonds. Prospective investors are encouraged to request such additional information, visit the District and ask such questions. Such requests should be directed to the Underwriter at: 200 South Orange Avenue, Suite 1900, Orlando, Florida 32801, Telephone: (407) , Attention: Douglas J. Sealy, Managing Director. DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS Rule 69W , Rules of Government Securities under Section (1), Florida Statutes, promulgated by the Florida Department of Financial Services, Office of Financial Regulation, Division of Securities and Finance ("Rule 69W "), requires the District to disclose each and every default as to the payment of principal and interest with respect to obligations issued or guaranteed by the District after December 31, Rule 69W further provides, however, that if the District, in good faith, believes that such disclosures would not be considered material by a reasonable investor, such disclosures may be omitted. The District is not and has not since December 31, 1975 been in default as to principal and interest on its bonds or other debt obligations. CONTINUING DISCLOSURE The Act requires that financial statements of the District be audited by an independent certified public accountant at least once a year. The current fiscal year of the District commences October 1 and the audited financial statements are generally expected to be available within 180 days after the end of each fiscal year. The Act further provides that the District s budget for the following fiscal year be adopted prior to October 1 of each year. Meetings of the Board are open to the public, and a proposed schedule of meetings for the year is published at the 42

49 beginning of each calendar year. Notice of meetings and the agenda for meetings are published prior to each meeting. The specific nature of the information to be contained in the Annual Report, as well as the circumstances under which other material events are reported, is contained in the form of Continuing Disclosure Agreement set forth in "APPENDIX E - FORM OF CONTINUING DISCLOSURE AGREEMENT" attached hereto. Failure to comply with the requirement of the Continuing Disclosure Agreement will not result in an Event of Default under the Indenture. The covenants contained in the Indenture and the Continuing Disclosure Agreement have been made in order to assist the Underwriter in complying with the Securities Exchange Commission Rule 15c2-12(b)(5) (the "Rule"). The District has not failed, in any material respect, to comply with any continuing disclosure undertakings entered into pursuant to the Rule. It is the current policy of the District to make the information referred to above available to requesting Owners or potential investors in the 2006A Bonds of the District. The District reserves the right to change this policy to comply with law, the requirements of the Securities and Exchange Commission or for any other reason in its sole discretion. Owners or potential investors requesting information should contact the District office c/o Fishkind & Associates 1201 Corporate Blvd., Orlando, Florida 32817, and its telephone number is (407) , Attn: Joe McLaren. ENFORCEABILITY OF REMEDIES The remedies available to the Beneficial Owners of the 2006A Bonds upon an event of default under the Indenture are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including the federal bankruptcy code, the remedies specified by the Indenture and the 2006A Bonds may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the 2006A Bonds will be qualified, as to the enforceability of the remedies provided in the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. LITIGATION There is no litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the 2006A Bonds, or in any way contesting or affecting the validity of the 2006A Bonds or any proceedings of the District taken with respect to the issuance or sale thereof, or the pledge or application of any moneys or security provided for the payment of the 2006A Bonds, or the existence or powers of the District. RATING No application for a rating has been made to any rating agency. 43

50 UNDERWRITING Prager, Sealy & Co., LLC (the "Underwriter") has agreed pursuant to a contract with the District, subject to certain conditions, to purchase the 2006A Bonds from the District at a purchase price of $33,092, consisting of $33,840,000 par amount of the 2006A Bonds, less the Underwriter's discount in the amount of $676,800.00, less original issue discount in the amount of $169,200.00, plus accrued interest from November 1, 2006 in the amount of $98, The Underwriter s obligations are subject to certain conditions precedent and the Underwriter will be obligated to purchase all of the 2006A Bonds if they are purchased. The 2006A Bonds may be offered and sold to certain dealers, banks and others at prices lower than the initial offering prices, and such initial offering prices may be changed from time to time by the Underwriter. VALIDATION The 2006A Bonds were validated by final judgment of the Circuit Court in and for Pinellas County, Florida on September 6, The appeal period with respect to such final judgment has expired with no action being taken. EXPERTS The references herein to Bayside Engineering, Inc., as to the District Engineer and the inclusion of "APPENDIX C ENGINEER'S REPORT" attached hereto, have been approved by said firm. Likewise, references herein to Fishkind & Associates, and the inclusion of "APPENDIX D MASTER ASSESSMENT METHODOLOGY AND FINAL SUPPLEMENTAL ASSESSMENT METHODOLOGY" have been approved by said firm. Both the Engineer's Report and the Assessment Methodology should be read in their respective entireties for complete information with respect to the subjects discussed therein. LEGAL MATTERS Certain legal matters related to the authorization, sale and delivery of the 2006A Bonds are subject to the approval of Ruden, McClosky, Smith, Schuster & Russell, P.A., Fort Lauderdale, Florida, Bond Counsel. Certain legal matters will be passed upon for the District by its counsel, GrayRobinson, P.A., Orlando, Florida and for the Developer by their counsel Stump, Storey & Callahan, Orlando, Florida. Certain legal matters will be passed upon for the Underwriter by its counsel, Greenberg Traurig, P.A., Orlando, Florida. Certain legal matters will be passed upon for the Trustee by its counsel, Holland & Knight LP, Miami, Florida DISCLOSURE OF MULTIPLE ROLES Bondowners should note that Fishkind & Associates is acting in dual capacities as both District Manager responsible for the administrative operations of the District and Financial Advisor responsible for the Assessment Methodology attached hereto as "APPENDIX D - 44

51 MASTER ASSESSMENT METHODOLOGY AND FINAL SUPPLEMENTAL ASSESSMENT METHODOLOGY." MISCELLANEOUS Any statements made in this Limited Offering Memorandum involving matters of opinion or estimates, whether or not expressly so stated, are set forth as such and not as representations of fact, and no representations are made that any of the estimates will be realized. The references herein to the 2006A Bonds and other documents referred to herein are brief summaries of certain provisions thereof. While such summaries are fair and accurate, such summaries do not purport to be complete and reference is made to such documents for full and complete statements of such provisions. This Limited Offering Memorandum is submitted in connection with the sale of the 2006A Bonds and may not be reproduced or used, as a whole or in part, for any purpose. This Limited Offering Memorandum is not to be construed as a contract with the purchaser or the Beneficial Owners of any of the 2006A Bonds. CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT By: /s/ David Schwarz David Schwarz Chairman, Board of Supervisors 45

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71 SECOND SUPPLEMENTAL TRUST INDENTURE CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT TO U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE Dated as of November 1, 2006 TABLE OF CONTENTS This Table of Contents is incorporated herein for ease of reference only as shall not be deemed a part of this Second Supplemental Trust Indenture. Page ARTICLE I Section 101. DEFINITIONS...3 Definitions...3 ARTICLE II AUTHORIZATION, ISSUANCE AND PROVISIONS OF 2006A BONDS...10 Section 201. Authorization of 2006A Bonds; Book-Entry Only Form...10 Section 202. Terms of 2006A Bonds...11 Section 203. Dating; Interest Accrual...11 Section 204. Denominations Section 205. Paying Agent...12 Section 206. Bond Registrar...12 Section 207. Conditions Precedent to Issuance of 2006A Bonds...12 ARTICLE III REDEMPTION OF 2006A Bonds...13 Section A Bonds Subject to Redemption...13 ARTICLE IV DEPOSIT OF PROCEEDS OF 2006A BONDS AND APPLICATION THEREOF; ESTABLISHMENT OF ACCOUNTS AND OPERATION THEREOF...13 Section 401. Establishment of Accounts...13 Section 402. Use of Proceeds of the 2006A Bonds...14 Section Acquisition and Construction Account...14 Section 404. Costs of Issuance Account...15 Section Reserve Account Section 406. Amortization Installments; Order of Redemption Section 407. Application of Revenues and Investment Earnings ARTICLE V CONCERNING THE TRUSTEE...19 Section 501. Acceptance by Trustee...19 Section 502. Limitation of Trustee s Responsibility...19 Section 503. Trustee s Duties...19 ARTICLE VI ADDITIONAL BONDS...19 Section 601. Parity Bonds...19 ARTICLE VII MISCELLANEOUS...20 Section 701. Confirmation of Master Indenture Section 702. Continuing Disclosure Agreement...20 Section 703. Additional Covenant Regarding Assessments...20 Section 704. Collection of Assessments...20 (i) EXHIBITS Exhibit A - Form of 2006A Bonds... A-1 Exhibit B Acquisition and Construction Account Requisition...B-1 Exhibit C Costs of Issuance Account Requisition...C-1 SECOND SUPPLEMENTAL TRUST INDENTURE THIS SECOND SUPPLEMENTAL TRUST INDENTURE (the Second Supplemental Indenture ) dated as of November 1, 2006, from CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT (the District ) to U.S. Bank National Association, as successorin interest to Wachovia Bank, National Association, as Trustee (the Trustee ), a national banking association existing under and byvirtue of the laws of the United Statesandauthorizedto acceptand execute trusts of the character herein set out, with its designated office and post office address located at Miami, Florida, Attention: Corporate Trust Department. All capitalized terms not otherwise defined herein shall have themeaningascribedtheretointhemasterindenture (hereinafter defined). WHEREAS, the District has entered into a Master Trust Indenture dated as of December 1, 2005 (the Master Indenture ) with the initial Trustee to secure the issuance from time to time of its Clearwater Cay Community Development District Capital Improvement Revenue Bonds (the Bonds ) in one or more Series and of its bond anticipation notes; and WHEREAS, pursuant to Resolution adopted by the Governing Body on November 28, 2005 (as amended and supplemented by the hereinafter defined Award Resolution, the Bond Resolution ), the District authorized the issuance, sale and deliveryof not to exceed $75,000,000of its Bonds in one or more Series as authorized under the Master Indenture; and WHEREAS, the Bonds were validated by final judgment of the Circuit Court of Pinellas County, Florida on September 6, 2006; and WHEREAS, the Governing Bodyof the District dulyadopted ResolutionNos and on September 28, 2005 providing for the acquisition and construction of the Project (hereinafter defined), providing estimated Costs of the Project, defining assessable property to be benefited by the Project, defining the cost of the Project with respect to which Assessments will be imposed and the manner in which such Assessments shall be levied against such benefited property within the District (the Assessments ), directing the preparation of an assessment roll, and, stating the intent of the District to issue bonds of the District secured by such Assessments to finance the costs of the acquisition and construction of the Project and the Governing Body of the District duly adopted Resolution No on November 28, 2005, following a public hearing conducted in accordance with the Act, to fix and establish the Assessments and duly adopted Resolution No on November 14, 2006 inconnectionwiththe2006assessments (asdefinedherein); and WHEREAS, the District has previously issued its Bond Anticipation Notes, Series 2005 in the initial aggregate principal amount of $30,650,000 (the 2005 Notes ) as bond anticipation notes under the Master Indenture, as supplementedbythatcertainfirstsupplemental Indenturedated asof December 1, 2005 between the District and the Trustee (the First Supplemental Indenture ) to (i) finance the Cost of the 2005 Project; and (ii) pay certain costs associated with the issuance of the 2005 Notes; and (ii) A-17 1

72 WHEREAS, pursuant to the AwardResolution (hereafterdefined), thedistrict, amongother matters, authorized the issuance of its not exceeding $37,000,000 in aggregate principal amount of its Capital Improvement Revenue Bonds in one Series, designated as Series 2006A, pursuant to the Master Indenture, as supplemented hereby, for the purpose of providing funds sufficient to: (i) pay, together with other legally available funds of the District, all amounts due andowingunderthe2005 Notes in full satisfaction thereof; (ii) paycapitalized InterestonsuchBonds; (iii) fundtheaccountin the Reserve Fund established for such Bonds; and (iv) paycertain costs associated with theissuance of such Bonds; WHEREAS, the executionanddeliveryofthe2006abonds (hereinafterdefined) andofthis Second Supplemental Indenture have been duly authorized by the Governing Body of the District and all things necessaryto make the 2006A Bonds, when executed bythe District and authenticated by the Trustee, valid and binding legal obligations of the District and to make this Second Supplemental Indenture a valid and binding agreement and, together with the Master Indenture, a valid and binding lien on the 2006 Trust Estate, as hereinafter defined (a Series Trust Estate as defined in the Master Indenture) have been done; NOW THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS SECOND SUPPLEMENTAL TRUST INDENTURE WITNESSETH: That the District, in consideration of the premises, the acceptance bythe Trusteeofthetrusts hereby created, the mutual covenants herein contained, the purchase and acceptance of the 2006A Bonds bythe purchaser or purchasers thereof, and other good and valuable consideration, receipt of which is hereby acknowledged, and in order to further secure the payment of the principal of, the Redemption Price, and interest on, the 2006A Bonds Outstanding from time to time, according to their tenor and effect, and such other payments required to be made under the Master Indenture or hereunder, and to further secure the observance and performance bythe Districtofallthecovenants, expressed or implied in the Master Indenture, in this Second Supplemental Indenture and in the 2006A Bonds: (a) has executed and delivered this Second Supplemental Indenture and (b) does hereby, in confirmation of the Master Indenture, grant, bargain, sell, convey, transfer, assign and pledge unto the Trustee, and unto its successors in the trusts under the Master Indenture, andtothem and their successors and assigns forever, all right, title and interest of the District, in, to and under, subject to the terms and conditions of the Master Indenture and the provisions of the Master Indenture pertaining to the application thereof for or to the purposes and on the terms set forth in the Master Indenture, the 2006 Pledged Revenues (as hereinafter defined) and the 2006 Pledged Funds and Accounts (as hereinafter defined) which shall comprise a part of the 2006 Trust Estate (as hereinafter defined); TO HAVE AND TO HOLD all the same bythe Master Indenture granted, bargained, sold, conveyed, transferred, assigned and pledged, or agreed or intended so to be, to the Trustee and its successors in said trust and to it and its assigns forever; IN TRUST NEVERTHELESS, except as in each such case may otherwise be provided in the Master Indenture, upon the terms and trusts in the Indenture set forth for the equal and proportionate benefit, securityand protection of all andsingularthepresentandfutureownersofthe 2006A Bonds issued or to be issued under and secured by this Second Supplemental Indenture, without preference, priorityor distinction as to lien or otherwise, of any one 2006A Bonds over any other 2006A Bond by reason of priority in their issue, sale or execution; PROVIDED FURTHER HOWEVER, that if the District, its successors or assigns, shall well and truly pay, or cause to be paid, or make due provision for the payment of the principal and Redemption Price of the 2006A Bonds or any2006a Bonds of a particular maturityissued, secured and Outstanding under this Second Supplemental Indenture and the interest due or to become due thereon, at the times and in the manner mentioned in the 2006A Bonds and this Second Supplemental Indenture, according to the true intent and meaning thereof, and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of the Master Indenture and this Second Supplemental Indenture to be kept, performed and observed by it, and shall pay or cause to be paid to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions of the Master Indenture and this Second Supplemental Indenture, then upon such final payments, this Second Supplemental Indentureandtherightshereby granted shall cease and terminate, with respect to all 2006A Bonds or any 2006A Bond of a particular maturity, otherwise this Second Supplemental Indenture shall remain in full force and effect; THIS SECOND SUPPLEMENTAL INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all 2006A Bonds issued and secured hereunder are to be issued, authenticated and delivered and all of the rights and property pledged to the payment thereof are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as in the Master Indenture (except as amended directly or by implication by this Second Supplemental Indenture), including this Second Supplemental Indenture, expressed, and the District has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective Owners, from time to time, of the 2006A Bonds, as follows: ARTICLE I DEFINITIONS Section 101. Definitions. All terms used herein that are defined in the recitals hereto are used with the same meaning herein unless the context clearlyrequires otherwise. Alltermsused herein that are defined in the Master Indenture are used with the same meaning herein (includingthe use of such terms in the recitals hereto and the granting clauses hereof) unless (i) expressly given a different meaning herein or (ii) the context clearlyrequiresotherwise. Inaddition, unlessthecontext clearly requires otherwise, the following terms used herein shall have the following meanings: Award Resolution shall mean Resolution No adopted bythe Governing Bodyon October 17, Bond Depository shall mean the securities depositoryfromtimetotimeundersection201 hereof, which may be the District. 2 3 Bond Participants shall mean those broker-dealers, banks and other financial institutions from time to time for which the Bond Depository holds Bonds as securities depository. Bond Resolution shall mean collectively, Resolution No of the Governing Body adopted on November 28, 2005 and the Award Resolution. Delinquent Assessment Interest shall mean 2006 Assessment Interest deposited by the District with the Trustee on or after May 1 of the year in which such Assessment Interest has, or would have, become delinquent under State law applicable thereto. Delinquent Assessment Principal shall mean 2006 AssessmentPrincipaldepositedbythe District with the Trustee on or after May1 of the year in which such 2006 Assessment Principalhas, or would have, become delinquent under State law applicable thereto. DTC shall mean The DepositoryTrustCompany, NewYork, NewYork, anditssuccessors and assigns. Engineer s Report shall mean the Amended and Restated Engineer s Report for Master Infrastructure dated October, 2006 prepared bybaysideengineering, assamemaybesupplemented and amended from time to time. First Supplemental Indenture shall mean that certain First SupplementalIndenturedated as of December 1, 2005 between the District and the initial Trustee supplementing the Master Indenture. Interest Payment Date shall mean each November 1 and May 1, commencing May 1, Nominee shall mean the nominee of the Bond Depository, which may be the Bond Depository, as determined from time to time pursuant to this Supplemental Indenture. Project shall mean the project described in the Engineer s Report Acquisition Agreement shall mean the Acquisition Agreement dated as of December 14, 2005 between the Developer and the District pursuant to which the Developer has agreedtosell, and the District has agreed to purchase, from time to time, interests in real property and completed components of infrastructure comprising the 2005 Project Assessments shall mean the portion of the Assessments to be levied and collected in connection with the 2005 Project pursuant to the Assessment Proceedings which are pledged to the payment of the 2006A Bonds Assessment Interest shall mean the interest on the 2006 Assessments which is pledged to the 2006A Bonds Assessment Principal shall mean the amount of 2006 Assessments received by the District which represents the principal and Amortization Installments relating to the 2006A Bonds, other than applicable Delinquent Assessment Principal and 2006 Prepayment Principal Assessment Proceedings shall mean the proceedings of the District with respect to the establishment, levy and collection of the Assessments, including, but not limited to Resolution Nos , , , and adopted bythe Governing Bodyof thedistrict, andany supplemental proceedings undertaken by the District with respect to the 2006 Assessments Assessment Revenues or 2006 Pledged Revenues shall mean all revenues derived by the District from the 2006 Assessments Investment Obligations shall mean and include, with respect to the 2006A Bonds, any of the following securities, if and to the extent that such securities are legal investments for funds of the District: (i) Government Obligations; (ii) obligations of the Government National Mortgage Association (including participation certificates issued by such Association); (iii) obligations of the Federal National Mortgage Association (including participation certificates issued by such Association); (iv) obligations of Federal Home Loan Banks; (v) deposits, Federal funds or bankers acceptances (withtermtomaturityof270 days or less) of any bank which has an unsecured, uninsured and unguaranteed obligation rated in one of the top two rating categories by both Moody s and S&P; 2005 Notes shall mean the District s $30,650,000 Bond Anticipation Notes, Series 2005, the entire principal amount of which is currently Outstanding. S&P; (vi) commercial paper rated in the top two rating category by both Moody s and 2005 Project shall mean the interests in land and the infrastructure improvements comprising the portion of the Project heretofore acquired and constructed by the District with proceeds of the 2005 Notes and remaining to be constructed by the District and/or acquired by the District pursuant to the Acquisition Agreement, in each case with proceeds of the 2005 Notes, as such 2005 Project is more fully described in the Engineer s Report. (vii) obligations of anystate of the United States orpoliticalsubdivisionthereofor constituted authority thereof the interest on which is exempt from federal income taxation under Section 103 of the Code and rated in one of the top two rating categories by both Moody s and S&P; 4 A-18 5

73 (viii) both (A) shares of a diversified open-end management investment company (as defined in the Investment Company Act of 1940) or a regulated investment company (as defined in Section 851(a) of the Code) that is a moneymarket fund thatisratedinthehighest rating category by both Moody s and S&P, and (B) shares of money market mutual funds that invest only in Government Obligations and repurchase agreements secured by such obligations, which funds are rated in the highest categories for such funds by both Moody s and S&P; (ix) repurchase agreements, which will be collateralized at the onset of the repurchase agreement of at least 103% marked to market weekly with Collateral with a domestic or foreign bank or corporation (other than life or property casualty insurance company) the long-term debt of which, or, in the case of a financial guaranty insurance company, claims paying ability, of the guarantor is rated at least AA by S&P and Aa by Moody s provided that the repurchase agreement shall provide that if during its term the provider s rating by either S&P or Moody s falls below AA- or Aa3, respectively, the provider shall immediately notify the Trustee and the provider shall at its option, within ten days of receipt of publication of such downgrade, either (A) maintain Collateral at levels, sufficient to maintain an AA rated investment from S&P and an Aa rated investment from Moody s, or (B) repurchase all Collateral and terminate the repurchase agreement. Further, if the provider s rating by either S&P or Moody s falls below A- or A3, respectively, the provider must at the direction of the District to the Trustee, within ten (10) calendar days, either (1) maintain Collateral at levels sufficient to maintain an AA rated investment from S&P and an Aa rated investment from Moody s, or (2) repurchase all Collateral and terminate the repurchase agreement without penalty. In the event the repurchase agreement provider has not satisfied the above conditions within ten (10) daysof the date such conditions apply, then the repurchase agreement shall provide that the Trustee shall be entitled to, and in such event, the Trustee shall withdraw the entire amount invested plus accrued interest within two (2) Business Days. Any repurchase agreement entered into pursuant to this Indenture shall contain the following additional provisions: (1) Failure to maintain the requisite Collateral percentage will require the District of the Trustee to liquidate the Collateral as provided above; (2) The Holder of the Collateral, as hereinafter defined, shall have possession of the Collateral or the Collateral shall have been transferred to the Holder of the Collateral, in accordance with applicable state and federal laws (other than by means of entries on the transferror s books); (3) The repurchase agreement shall state and an opinion of Counsel in form and in substance satisfactoryto the Trustee shall be rendered that the Holder of the Collateral has a perfected first priority security interest in the collateral, any substituted Collateral and all proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is in possession); (4) The repurchase agreement shall be a repurchase agreement as defined in the United States BankruptcyCode and, iftheproviderisadomesticbank, a qualified financial contract as defined in the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ( FIRREA ) and such bank is subject to FIRREA; (5) The repurchase transaction shall be in the form of a written agreement, and such agreement shall require theprovidertogivewrittennoticetothe Trustee of any change in its long-term debt rating; (6) The District or its designee shall represent that ithasnoknowledgeof any fraud involved in the repurchase transaction; (7) The District and the Trustee shall receive the opinion of Counsel (which opinion shall be addressed to the District and the Trustee and shall beinform and substance satisfactory to the Trustee) that such repurchase agreement complies with the terms of this section and is legal, valid, binding and enforceable upon the provider in accordance with its terms; (8) The term of the repurchase agreement shall be no longer than ten years; (9) The interestwithrespecttotherepurchasetransactionshallbepayable no less frequently than quarterly; (10) The repurchase agreement shall provide that the Trustee may withdraw funds without penalty at any time, or from time to time, for any purpose permitted or required under this Indenture; (11) Any repurchase agreement shall provide that a perfected security interest in such investments is created for the benefit of the Beneficial Owners under the Uniform Commercial Code of Florida, or book-entryproceduresprescribedat31 C.F.R et seq. or 31 C.F.R et seq. are created for the benefit of the Beneficial Owners; and (12) The Collateral delivered or transferredtothedistrict, thetrustee, ora third-party acceptable to, and acting solely as agent for, the Trustee (the Holder of the Collateral ) shall be delivered and transferredincompliancewithapplicablestate and federal laws (other than by means of entries on provider s books) free and clear of any third-party liens or claims pursuant to a custodial agreement subject to the prior written approval of the majority of the Owners and the Trustee. The custodial agreement shall provide that the Trustee must have disposition or control over the Collateral of the repurchase agreement, irrespective of an event of default by the provider of such repurchase agreement. If such investments are held bya third-party, theyshall be held as agent for the benefit ofthe Trustee as fiduciary for the Beneficial Owners and not as agent for the bank serving as Trustee in its 6 7 commercial capacity or any other party and shall be segregated from securities owned generally by such third party or bank; (x) any other investment approved in writing by the Owners of a majority in aggregate principal amount of the Bonds secured thereby; (xi) bonds, notes and other debt obligations of any corporation organized under the laws of the United States, any state or organized territory of the United States or the District of Columbia, if such obligations are rated in one of the three highest ratings by both Moody s and S&P or in one of the two highest categories by either S&P or Moody s; and (xii) investment agreements with a bank, insurance company or other financial institution, or the subsidiaryof a bank, insurance companyorotherfinancialinstitutionifthe parent guarantees the investment agreement, which bank, insurance company, financial institution or parent has an unsecured, uninsured and unguaranteed obligation (or claimspaying ability) rated in the highest short-term rating category by Moody s or S&P (if the term of such agreement does not exceed 365 days), or has an unsecured, uninsured and unguaranteed obligation (or claims paying ability) rated by at least 2 national rating agencies with a minimum rating of Aa2, AA or AA by Moody s, S&P or Fitch, respectively (if the term of such agreement is more than 365 days) or is the lead bank of a parent bank holding companywith an uninsured, unsecured and unguaranteed obligation oftheaforesaidratings, provided: (A) interest is paid at least quarterlyat a fixed rate (subjecttoadjustments for yield restrictions required by the Code) during the entire term of the agreement, consistent with the Interest Payment Dates; (B) moneys invested thereunder may be withdrawn without penalty, premium, or charge upon not more than two days notice unless otherwise specified in a Supplemental Indenture; (C) the same guaranteed interest rate will be paid on any future deposits made to restore the account to its required amount; and (D) the Trustee receives an opinion of counsel that such agreement is an enforceable obligation of such insurance company, bank, financial institution or parent; (E) in the event of a suspension, withdrawal, or downgrade below Aa3, AA- or AA- bymoody s, S&P or Fitch, respectively, the provider shall immediately notify the Trustee and the provider shall at its option, within ten days of receipt of publication of such downgrade, either, at the choice of the Provider: (1) collateralize the agreement at levels, sufficient to maintainan "AA" rated investment from S&P and an "Aa2" from Moody's with a market to market approach, or (2) assign the agreement to a provider acceptable to the District, as long as the minimum rating criteria of "AA" rated investment from S&P and an "Aa2" from Moody s with a market to market approach or (3) have the agreement guaranteedbyaprovideracceptabletothe District. (F) in the event of a suspension, withdrawal, or downgradebelowa3, A- or A- by Moody s, S&P or Fitch, respectively, the provider must, at the direction of the District or the Trustee, within 10 days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment in either case with no penalty or premium to the District or Trustee. In the event the Provider has not satisfied the above condition with ten (10) days of the date such conditions apply, then the agreement shall provide that the Trustee shall be entitled to, and in such event, the Trustee shall withdraw the entire amount invested plus accrued interest within two (2) Business days. (xiii) bonds, notes and other debt obligations of any corporation organized under the laws of the United States, any state or organized territory of the United States or the District of Columbia, if such obligations are rated in one of the three highest ratings by both Moody s and S&P or in one of the two highest categories by either S&P or Moody s; (xiv) the Local Government Surplus Funds Trust Fund as described in Florida Statutes, Section or the corresponding provisions of subsequent laws provided that such fund is rated at least AA by S&P (without regard to gradation) or at least Aa by Moody s (without regard to gradation); and (xv) other investments permitted by Florida law. Under all circumstances, the Trustee shall be entitled to request and to receive from the District a certificate of an Authorized Officer setting forth that any investment directed by the District is permitted under the Indenture Pledged Funds and Account shall mean the Funds and Accounts (except for the 2006 Rebate Account) established hereby Prepayment Principal shall mean the excess amount of 2006 Assessment Principal received by the District over the 2006 Assessment Principal included within an Assessment appearing on any outstanding and unpaid tax bill, whether or not mandated to be prepaid in accordance with the Assessment Proceedings. Anything herein or in the Master Indenture to the contrary notwithstanding, the term 2006 Prepayment Principal shall not mean the proceeds of any Refunding Bonds or other borrowing of the District Reserve Account Requirement shall mean the lesser of: (A) the Maximum Annual Debt Service Requirement for all Outstanding 2006A Bonds, (B) 125% of the average annual debt 8 A-19 9

74 service for all Outstanding 2006A Bonds, or (C) 10% of the proceeds of the 2006A Bonds, in each case calculated as of the date of original issuance thereof Trust Estate shall mean the2006pledgedrevenuesandthe2006pledged Fundsand Accounts. 2006A Bonds shallmeanthedistrict s$33,840,000capital Improvement RevenueBonds, Series 2006A, issued and delivered pursuant to the provisions of the Indenture. ARTICLE II AUTHORIZATION, ISSUANCE AND PROVISIONS OF 2006A BONDS Section 201. Authorization of 2006A Bonds; Book-Entry Only Form. The 2006A Bonds are hereby authorized to be issued in one Series in the aggregate principal amount of $33,840,000 for the purposes enumerated in the recitals hereto and designated as Clearwater Cay Community Development District Capital Improvement Revenue Bonds, Series 2006A. The 2006A Bonds shall be substantially in the form set forth as Exhibit A to this Second Supplemental Indenture. The 2006A Bonds shall be initially issued in the form of a separate single certificated fully registered 2006A Bond and shall be numbered RA-1. Upon initial issuance, the ownership of such 2006A Bonds shall be registered in the registration books kept bythe Bond Registrar in the name of Cede & Co., as Nominee of DTC, the initial Bond Depository. Except as provided in this Section 201, all of the Outstanding 2006A Bonds shall be registered in the registration books kept by the Bond Registrar in the name of Cede & Co., as Nominee of DTC. With respect to 2006A Bonds registered in the registration books kept bythebondregistrar in the name of Cede & Co., as Nominee of DTC, the District, the Trustee, the Bond Registrar and the Paying Agent shall have no responsibility or obligation to any such Bond Participant or to any indirect Bond Participant. Without limiting the immediately preceding sentence, the District, the Trustee, the Bond Registrar and the Paying Agent shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Bond Participant with respect to any ownership interest in the 2006A Bonds, (ii) the delivery to any Bond Participant or any other person other than an Owner, as shown in the registration books kept by the Bond Registrar, of any notice with respect to the 2006A Bonds, including any notice of redemption, or (iii) the payment to any Bond Participant or any other person, other than an Owner, as shown in the registration books kept by the Bond Registrar, of any amount with respect to principal of, premium, if any, or interest on the 2006A Bonds. The District, the Trustee, the Bond Registrar and the Paying Agent may treat and consider the person in whose name each 2006A Bond is registered in the registrationbookskept by the Bond Registrar as the absolute owner of such 2006A Bond for the purpose of payment of principal, premium and interest with respect to such 2006A Bond, for the purpose of giving notices of redemption and other matters with respect to such 2006A Bond, for the purpose of registering transfers with respect to such 2006A Bond, and for all other purposes whatsoever. The Paying Agent shall pay all principal of, premium, if any, and interest on the 2006A Bonds only to or upon the order of the respective Owners, as shown in the registration books kept bythebondregistrar, or their respective attorneys dulyauthorized in writing, as provided herein and all such payments shall be valid and effective to fully satisfy and discharge the District s obligations with respect to payment of principal of, premium, if any, and interest on the 2006A Bonds to the extent ofthesumorsumsso paid. No person other than an Owner, as shown in the registration bookskeptbythebondregistrar, shall receive a certificated 2006A Bond evidencing the obligation of the District to make payments of principal, premium, if any, and interest pursuant to the provisions hereof. Upon deliverybydtc to the District of written notice to the effect that DTC has determined to substituteanewnomineein place of Cede & Co., and subject to the provisions herein with respect to Record Dates, the words Cede & Co. in this Second Supplemental Indenture shall refer to such new Nominee of DTC; and upon receipt of such a notice the District shall promptly deliver a copy of the same to the Trustee, Bond Registrar and the Paying Agent. Upon receipt by the Trustee or the District of written notice from DTC: (i) confirming that DTC has received written notice from the District to the effect that a continuationoftherequirement that all of the Outstanding 2006A Bonds be registered in the registration books kept by the Bond Registrar in the name of Cede & Co., as Nominee of DTC, is not in the best interest of the beneficial owners of the 2006A Bonds or (ii) to the effect that DTC is unable or unwilling to discharge its responsibilities and no substitute Bond Depository willing to undertake the functions of DTC hereunder can be found which is willing and able to undertake such functions upon reasonable and customaryterms, the 2006A Bonds shall no longerberestrictedtobeingregisteredintheregistration books kept by the Bond Registrar in the name of Cede & Co., as Nominee of DTC, but may be registered in whatever name or names Owners transferring or exchanging the 2006A Bonds shall designate, in accordance with the provisions hereof. Section 202. Terms of 2006A Bonds. The 2006A Bonds shall be Term Bonds. The 2006A Bonds shall bear interest at the fixed interest rate per annum and shall mature in the amount and on the date set forth below: Maturity Date Principal Amount Interest Rate Cusip No. May 1, 2037 $33,840, % AA9 Section 203. Dating; Interest Accrual. Each 2006A Bond shall be dated November 1, Each 2006A Bond also shall bear its date of authentication. Each 2006A Bond shall bear interest from the Interest Payment Date to which interest has been paid next preceding thedateofits authentication, unless the date of its authentication: (i) is an Interest Payment Date to which interest on such 2006A Bond has been paid, in which event such 2006A Bond shall bear interest from its date of authentication; or (ii) is prior to the first Interest Payment Date for the 2006A Bonds, in which event, such 2006A Bond shall bear interest from its dated date. Interest on the 2006A Bonds shall be due and payable on each November 1 and May 1, commencing May 1, 2007, and shall be computed on the basis of a 360-day year of twelve 30-day months. Section 204. Denominations. The 2006A Bonds shall be issued in Authorized Denominations; provided, however, that the 2006A Bondsshallbedelivered totheinitialpurchasers thereof only in aggregate principal amounts of $100,000 or integral multiples of Authorized Denominations of $5,000 in excess of $100, Section 205. Paying Agent. The District appointsu.s. BankNationalAssociation, as successor in interest to Wachovia Bank, National Association, as the Trustee and Paying Agent for the 2006A Bonds. Section 206. the 2006A Bonds. Bond Registrar. The District appoints the Trustee as Bond Registrarfor Section 207. Conditions Precedent to Issuance of 2006A Bonds. In addition to complying with the requirements set forth in the Master Indentureinconnectionwiththeissuanceof the 2006A Bonds, all the 2006A Bonds shall be executed by the District for delivery to the Trustee and thereupon shall be authenticated by the Trustee and delivered to the District or upon its order, but only upon the further receipt by the Trustee of: (a) Certified copies of the Assessment Proceedings; (b) Executed copies of the Bond Resolution, the Master Indenture and this Second Supplemental Indenture; (c) A Bond Counsel opinion to the effect that: (i) the Master Indenture and this Second Supplemental Indenture have been duly authorized executed and delivered by the District; (ii) the Master Indenture, as amended and supplemented by this Second Supplemental Indenture, creates a valid pledge of the 2006 Trust Estate and each constitutes the valid and binding obligation of the District, enforceable in accordancewithitsrespective terms and the 2006A Bonds are valid, binding, special limited obligations of the District, payable in accordance with, and as limited by the terms of the Master Indenture and this Second Supplemental Indenture, subject, in each case, to bankruptcy, insolvency or other laws affecting the rights of creditors generally and; (d) An opinion of Counsel to the District to the effect that the District has good right and lawful authority under the Act to apply proceeds of the 2006A Bonds and other funds held under the First Supplemental Indenture to payand satisfythe 2005 Notes, that all proceedings undertaken by the District with respect to the 2006 Assessments have been in accordance with Florida law and that the District has taken all action necessary to levy and impose the 2006 Assessments, and the 2006 Assessments are legal, valid and binding first liens upon the property against which such 2006 Assessments are made, coequal with the lien of all state, county, district and municipal taxes, superior in dignity to all other liens, titles and claims, until paid, and that the 2006 Assessments may be collected as and when needed in an amount sufficient to paythe principal of and interest on the2006abondswhen due; (e) A certificate of an Authorized Officer to the effect that, upon the authentication and delivery of the 2006A Bonds, the District will not be in default in the performance of the terms and provisions of the Master Indenture, the First Supplemental Indenture or this Second Supplemental Indenture; and (f) A certified copy of the final judgment of validation in respect of the Bonds together with a certificate of no appeal. ARTICLE III REDEMPTION OF 2006A Bonds Section A Bonds Subject to Redemption. The 2006A Bonds aresubjectto redemption prior to maturity as provided in the form thereof set forth as Exhibit A to this Second Supplemental Indenture. If less than all of the 2006A Bonds are to be redeemed, the Trustee shall select the 2006A Bonds or portions thereof to be redeemed by lot. Notice of redemption shall be given as provided in the Master Indenture. ARTICLE IV DEPOSIT OF PROCEEDS OF 2006A BONDS AND APPLICATION THEREOF; ESTABLISHMENT OF ACCOUNTS AND OPERATION THEREOF Section 401. hereby established. Establishment of Accounts. The following Funds and Accounts are (a) There are hereby established within the Acquisition and Construction Fund held by the Trustee the following accounts: (i) a 2006 Acquisition and Construction Account; (ii) a 2006 Costs of Issuance Account; and (iii) a 2006 Capitalized Interest Account. (b) There are hereby established within the Debt Service Fund held by the Trustee: (i) a 2006 Debt Service Account and, therein, a 2006 Sinking Fund Account and a 2006 Interest Account; and (ii) a 2006 Redemption Account, and, therein, a 2006 Prepayment Subaccount and an Optional Redemption Subaccount. (c) There is hereby established within the Revenue Fund held by the Trustee a 2006 Revenue Account. (d) There is hereby established within the Reserve Fund held by the Trustee a 2006 Reserve Account. (e) There is hereby established within the Rebate Fund held by the Trustee a 2006 Rebate Account. (f) The Trustee is herebydirected to close, onthedatehereof, alloftheaccounts established under the First Supplemental Indenture for the 2005 Notes, and to transfer 12 A-20 13

75 $3,378, of the funds remaining in such Accounts as providedinsection402(e) and (f) below. Any earnings that would otherwise be credited to such Accounts in the future shall be transferred to the 2006 Acquisition and Construction Account. Section 402. Use of Proceeds of the 2006A Bonds. The net proceeds of sale of the 2006A Bonds, $33,092, (the BondProceeds ), togetherwith$3,378, representingthe balance of the amounts in the 2005 Acquisition and Construction Account and any other Accounts established for the 2005 Notes pursuant to the First Supplemental Indenture (there being no other funds held bythe Trustee in anyof the other Accounts established for the 2005 Notes underthefirst Supplemental Indenture) (the Note Proceeds ), shall as soon as practicable upon the delivery thereof to the Trustee by the District pursuant to Section 207 of the Master Indenture, be applied as follows: (a) $1,672, of the Bond Proceeds, representing CapitalizedInterestonthe 2006A Bonds shall be deposited in the 2006 Capitalized Interest Account; (b) $98, of the Bond Proceeds, representingaccruedinterestonthe2006a Bonds shall be deposited in the 2006 Interest Account; (c) $2,305, of the Bond Proceeds, representingthe2006reserveaccount Requirement shall be deposited to the 2006 Reserve Account; (d) $206, of the Bond Proceeds shall bedeposited tothecreditofthe2006 Costs of Issuance Account; (e) $28,809, of the Bond Proceeds and $3,378, of the Note Proceeds shall be transferred to the Trustee and applied on November 20, 2006 to pay all Outstanding principal of and interest on the 2005 Notes in the aggregate amount of $32,187,608.33; and (f) the balance of the funds remaining in theaccounts establishedunderthefirst Supplemental Indenture for the 2005 Notes shall be deposited to the credit of the 2006 Acquisition and Construction Account and applied as provided herein and the Master Indenture. Section Acquisition and Construction Account. (a) Amounts on deposit in the 2006 Acquisition and Construction Account shall be applied from time to time to acquire and/or construct components any unconstructed or unacquired portions of the 2005 Project pursuant to the 2005 Acquisition Agreement, upon compliance with the requisition provisions set forth in Section 503(b) of the Master Indenture and pursuant to the form of requisition attached hereto as Exhibit B. (b) Anybalance remaining afterthedateofcompletionofthe2005project, after retaining the amount, if any, of all remainingunpaid Costs of the2005projectsetforthinthe Engineers Certificate establishing such Date of Completion, shall, atthewrittendirectionof an Authorized Officer of the District, first be transferred to and deposited in the2006rebate Account in the amount, and to the extent necessary, so that the amount on deposit therein equals the rebate amount and thereafter be transferred to and deposited in the 2006 Redemption Account and applied to the redemption of the 2006A Bonds in the manner set forth in Exhibit A hereto or, upon the District obtaining an opinion of nationally recognized bond counsel to the effect that such application will not adversely affect the tax-exempt status of the 2006A Bonds, applied to the Cost of a Series Project or Additional Series Project other than the 2005 Project. (c) Amounts on deposit in the 2006 Capitalized Interest Account shall be deposited into the 2006 Interest Account and used to pay interest coming due on the 2006A Bonds until there are no longer moneys therein for such purpose. Section 404. Costs of Issuance Account. The amount deposited in the 2006 Costs of Issuance Account shall, at the written direction of an Authorized Officer to the Trustee, be used to paythe costs of issuance relating to the 2006A Bonds pursuant totherequisitionintheformattached hereto as Exhibit D. At the written direction of an Authorized Officer, any amounts depositedinthe 2006 Costs of Issuance Account which are not needed to paysuch costs shallbetransferredoverand deposited into the 2006 Acquisition and Construction Account and used for the purposes permitted therefor. Section Reserve Account. The 2006 ReserveAccountshallbefundedwith 2006 Investment Obligations. Amounts on deposit in the 2006 Reserve Account shall be used only for the purpose of making payments into the 2006 Interest Account and the 2006 Sinking Fund Account to pay Debt Service on the 2006A Bonds, when due, without privilege or priority of one 2006A Bond over another, to the extent the moneys on depositinsuchaccountthereinandavailable therefor are insufficient and for no other purpose. On the earliest date on which there is on deposit in the 2006 Reserve Account, sufficient moneys, taking into account other moneys available therefor (other than amounts on deposit in the 2006 Acquisition and Construction Account), to pay and redeem all of the Outstanding 2006A Bonds, together with accrued interest and redemption premium, if any, on such 2006A Bonds to the earliest date of redemption permitted herein, the Trustee shall transfer the amount on deposit in the 2006 Reserve Account into the 2006 Prepayment Subaccount to pay and redeem all of the Outstanding 2006A Bonds on the earliest date permitted for redemption herein and therein. The District mayprovide that the 2006 Reserve Requirement required to beondepositinthe 2006 Reserve Account shall be satisfied by obtaining bond insurance issued by a reputable and recognized municipal bond insurer, by a letter of credit rated in one of the two highest categories by one of two nationally recognized rating agencies, by a surety bond or any combination thereof (individually or collectively, the Reserve Account Credit Instrument ). At any time after the issuance of the 2006A Bonds, the District may withdraw any or all of the amount of money on deposit in the 2006 Reserve Account and substitute in its place a ReserveAccountCredit Instrument as described above in the face amount of such withdrawal and such withdrawn moneys shall, after payment of the premium for such Reserve Account Credit Instrument, be transferred to the 2006 Prepayment Subaccount of the 2006 Redemption Account and applied to the redemption of 2006A Bonds or, upon the District obtaining an opinion of nationallyrecognized bond counsel to the effect that such application will not adverselyaffect the tax-exemptstatusofthe2006abonds, beusedfor any other lawful purpose of the District. Section 406. Amortization Installments; Order of Redemption. (a) The Amortization Installments established for the 2006A Bonds shall be as set forth in the form of Bonds attached hereto. (b) Upon anyredemption of 2006ABonds (otherthan 2006ABondsredeemedin accordance withscheduledamortizationinstallmentsandotherthan2006abondsredeemed at the direction of the District accompanied by a cash flow certificate as required by Section 506(b) of the Master Indenture), the District shall cause to be recalculated and delivered to the Trustee revised Amortization Installments recalculated soastoamortizetheoutstanding 2006A Bonds in substantially equal annual installments of principal and interest (subject to rounding to Authorized Denominations of principal) over the remaining term of the 2006A Bonds. Section 407. Application of Revenues and Investment Earnings. (a) The Trustee shall depositintothe2006revenueaccountanyand allamounts required to be deposited therein by this Section 407 or by any other provision of the Master Indenture or this Second Supplemental Indenture, and any other amounts or payments specifically designated by the District pursuant to a written direction or by a Supplemental Indenture for said purpose. The 2006 Revenue Account shall beheldbythetrusteeseparate and apart from all other Funds and Accounts held under the Indenture and from all other moneys of the Trustee. (b) The District shall deposit 2006 Assessment Revenues with the Trustee immediately upon receipt together with a written accounting setting forth the amounts of such 2006 Assessment Revenues in the following categories which shall be depositedbythe Trustee into the Funds and Accounts established hereunder as follows: (i) 2006 Assessment Principal, which shall be deposited into the 2006 Sinking Fund Account; (ii) 2006 Prepayment Principal, which shall be deposited into the 2006 Prepayment Subaccount in the 2006 Redemption Account; (iii) 2006 Delinquent Assessment Principal, whichshallfirstbeappliedto restore the amount of any withdrawal from the 2006 Reserve Account to pay the principal of 2006A Bonds, and, the balance, if any, shall be deposited into the 2006 Sinking Fund Account; (iv) Delinquent Assessment Interest, whichshallfirstbeappliedtorestore the amount of any withdrawal from the 2006 Reserve Account to pay the interest on 2006A Bonds and, the balance, if any, depositedintothe2006revenueaccount; and (v) all other 2006 Assessment Revenues, which shall be deposited into the 2006 Revenue Account. Moneys other than 2006 Assessment Revenues, shall, at the written direction of the District be deposited into the Optional Redemption Subaccount of the 2006 Redemption Account and used to pay the principal of and premium, if any, on 2006A Bonds called or to be called for redemption at the written direction of the District in accordance with the provisions for redemption of 2006A Bonds as set forth in the form of 2006A Bonds attached hereto. (c) On each March 15 and September 15 (or if such March 15orSeptember15is not a Business Day, on the Business Day next preceding such day), the Trustee shall determine the amount on deposit in the 2006 Prepayment Subaccount of the 2006 Redemption Account and, if the balance therein is greater than zero, shall transfer from the 2006 Revenue Account for deposit into such 2006 Prepayment Subaccount, an amount sufficient to increase the amount on deposit therein to an integral multiple of $5,000, and, shall thereupon give notice and cause the extraordinary mandatory redemption of the corresponding 2006A Bonds on the next succeeding Interest Payment Date in themaximum aggregate principal amount for which moneys are then on deposit in the 2006 Prepayment Subaccount in accordance with the provisions for extraordinary redemption of the 2006A Bonds set forth in the form of 2006A Bond attached hereto, Section 301 hereof, and Article Ill of the Master Indenture. (d) Subject to the following clause FIRST, on each May 1 (or if such May 1 is not a Business Day, on the Business Day preceding such May 1), the Trustee shall transfer from amounts on deposit in the 2006 Revenue Account to the Funds and Accounts designated below, the following amounts in the following order of priority: FIRST, from the 2006 Revenue Account to the 2006 Interest Account of the Debt Service Fund, an amount equal to the amount of interest payable on all 2006A Bonds then Outstanding on such May 1 or the next successive November 1, less any amount transferred from the 2006 Capitalized Interest Account in accordance with Section 403(c) hereof and less any other amount already on deposit in the 2006 Interest Account not previously credited; SECOND, (i) beginning on May 1, 2008, and no later than the Business Day next preceding each May 1 thereafter while 2006A BondsremainOutstanding, tothe 2006 Sinking Fund Account, an amount equal to the principal amount of the 2006A Bonds subject to mandatory sinking fund redemption on such May 1 or maturing on such May 1, less any amount on deposit in the 2006 Sinking Fund Account not previously credited; 16 A-21 17

76 THIRD, to the 2006 Reserve Account, the amount, if any, whichisnecessary to make the amount on deposit therein equal to the 2006 Reserve Account Requirement with respect to the 2006A Bonds; and FOURTH, the balance shall be retained in the 2006 Revenue Account. Anything herein to the contrarynotwithstanding, it shall not, a fortiori, constitute an Event of Default hereunder if the full amount of the foregoing deposits are not made due to an insufficiency of funds therefor. (d) Within ten (10) Business Days after the last Interest Payment Date in each calendar year, the Trustee shall, at the written direction of thedistrict, withdrawanymoneys held for the credit of the 2006 Revenue Account which are not otherwise required to be deposited to other 2006 Pledged Funds and Accounts pursuant to this Section and deposit such moneys first to the credit of the 2006 Rebate Account in the amount, and to the extent necessary, so the amount on deposit therein equals the accrued rebate obligation under Section 148(f) of the Code, and secondly, if the Trustee has received a certification from the District by such date detailing the amount of such obligation which shall be deposited and thereafter to the District to be used to pay the operating and administrative costs and expenses of the District; provided, however, that on the date of such proposed transfer the amount on deposit in the 2006 Reserve Account shall be equal to the 2006 Reserve Account Requirement and, provided further, that the Trustee shall not have actual knowledge of an Event of Default under the Master Indenture or hereunder relating to any of the 2006A Bonds, including the payment of Trustee s fees and expenses then due. (e) Anything herein or in the Master Indenture to the contrary notwithstanding, earnings on investments in all of the Funds and Accounts held as security for the 2006A Bonds shall be invested only in 2006 Investment Obligations, and further, earnings on the 2006 Acquisition and Construction Account and the subaccountsthereinshallberetained, as realized, in such Accounts or subaccounts and used for the purpose of such Account or subaccount. Earnings on investments in the 2006 Sinking Fund Account and the 2006 Redemption Account shall be deposited, as realized, to the credit of the 2006 Revenue Account and used for the purpose of such Account. Earnings on investments in the 2006 Reserve Account shall be disposed of as follows: (i) if there was no deficiency (as defined in Section 509 of the Master Indenture) in the 2006 Reserve Account as of the most recent dateonwhichamounts on deposit in such 2006 Reserve Account were valued by the Trustee, and if no withdrawals have been made from such2006reserveaccountsincesuchdatewhich have created a deficiency, then earnings on investments in such 2006 Reserve Account shall, through November 1, 2007 be deposited into the 2006 Capitalized Interest Account, and thereafter, into the 2006 Revenue Account; and (ii) if as of the last date on which amounts on deposit in a 2006 Reserve Account were valued by the Trustee there was a deficiency (as defined in Section 509 of the Master Indenture) in such 2006 Reserve Account, or if after such date withdrawals have been made from the 2006 Reserve Account and have created such a deficiency, then earnings on investments in the 2006 Reserve Account shall be deposited to the credit of the 2006 Reserve Account until the amount on deposit therein equals the 2006 Reserve Account Requirement and thereafter shall, through November 1, 2007, be deposited into the2006capitalizedinterestaccountand, after November 1, 2007, be deposited into the 2006 Revenue Account. ARTICLE V CONCERNING THE TRUSTEE Section 501. Acceptance by Trustee. The Trustee accepts the trusts declared and provided in this Second Supplemental Indenture and agrees to perform such trusts upon the terms and conditions set forth in the Master Indenture. Section 502. Limitation of Trustee s Responsibility. The Trustee shall not be responsible in any manner for the due execution of this Second Supplemental Indenture by the District or for the recitals contained herein, all of which are made solely by the District. Section 503. Trustee s Duties. Except as otherwise expressly stated in this Second Supplemental Indenture, nothing contained herein shall limit the rights, benefits, privileges, protection and entitlements inuringtothetrusteeunderthemasterindenture, including, particularly, Article VI thereof. ARTICLE VI ADDITIONAL BONDS Section 601. Parity Bonds. The District covenants and agreesthatsolongasthereare any 2006A Bonds Outstanding, it shall not cause or permit to be caused any lien, charge or claim against the 2006 Trust Estate; provided, however, that the District reserves the right to issue bonds, notes or other obligations payable from or secured by the 2006 Trust Estate pledged to the 2006A Bonds, but only so long as such bonds, notes or other obligations are not entitled to a lien upon or charge against the 2006 Trust Estate equal or prior to the lien of this SecondSupplemental Indenture securing the 2006A Bonds. Each bond, note or other obligation issued pursuant to the authority of the preceding sentence shall conspicuouslystate on the face thereof that such obligationis, andsuch obligation shall be, subordinate and inferior in right of lien and payment to the lien of the Master Indenture and this Second Supplemental Indenture on such 2006 Trust Estate and the rights and remedies of the holders of such subordinate debt to payment and upon default thereonandunderany installment securing such subordinate debt shallnotbesubjecttoactionforcollectionor acceleration thereof except upon the exercise of and subject to the first and prior rightsofthetrusteeandowners of the 2006A Bonds to payment and the control of remedies and acceleration grantedhereunderand under the Master Indenture ARTICLE VII MISCELLANEOUS Section 701. Confirmation of Master Indenture. As supplemented by this Second Supplemental Indenture, the Master Indenture is in all respects ratified and confirmed, and this Second Supplemental Indenture shall be read, taken and construed as a part of the Master Indenture so that all of the rights, remedies, terms, conditions, covenants and agreements of the Master Indenture, except insofar as modified herein, shall apply and remain in full force and effect with respect to this Second Supplemental Indenture and to the 2006A Bonds issued hereunder. IN WITNESS WHEREOF, Clearwater CayCommunityDevelopment District has caused these presents to be signed in its name and on its behalf by its Chairman, and its official seal to be hereunto affixed and attested by the Secretary, thereunto duly authorized, and to evidence its acceptance of the trusts hereby created and the Trustee has caused these presents to be signed in its name and on its behalf by its duly authorized officer. Attest: SEAL CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT Section 702. Continuing Disclosure Agreement. Contemporaneously with the execution and delivery hereof, the District has executed and delivered a Continuing Disclosure Agreement in order to comply with the requirements of Rule 15c2-12 promulgated under the Securities and Exchange Act of The District covenants and agrees to comply with the provisions of such Continuing Disclosure Agreement; however, as set forth therein, failure to so comply shall not constitute an Event of Default hereunder, but, instead shall be enforceable by mandamus, injunction or any other means of specific performance. By: Secretary By: Chairman, Board of Supervisors U.S. BANK NATIONAL ASSOCIATION, as Trustee Section 703. Additional Covenant Regarding Assessments. In addition, and not in limitation of, the covenants contained elsewhere in this Supplemental Indenture and in the Master Indenture, the District covenants to comply with the terms of the proceedings heretofore adopted with respect to the 2006 Assessments and to levy the 2006 Assessments and required payments under the true up mechanism set forth in the assessment methodology reports adopted by the District in connection with the Assessments, in such manner as will generate funds sufficient to pay the principal of and interest on the 2006A Bonds, when due. Section 704. Collection of Assessments. Anythinghereinorin themasterindentureto the contrary notwithstanding, the Assessments and the interest thereon maybe collected directlyby the District and are not required to be collected utilizing the Uniform Method of Collection to the extent such Assessments are levied on unplatted District Lands. Following an Event of Default, the Owners of not less than fifty-one percent (51%) in aggregate principal amount of the 2006A Bonds Outstanding may direct the District as to the collection method to be used by it with respect to the 2006A Bonds. By: Authorized Signatory 20 A-22 21

77 STATE OF FLORIDA ) ) SS: COUNTY OF ) On this day of, 2006, before me, a notary public in and for the State and County aforesaid, personally appeared David Schwarz and Joe MacLaren, the Chairman and the Secretary, respectively, of the Board of Supervisors of Clearwater Cay Community Development District, who acknowledged that they did sign the foregoing instrument as such officers, respectively, for and on behalf of ClearwaterCayCommunityDevelopmentDistrict; thatthesameis their free act and deed as such officers, respectively, and the free act and deed of Clearwater Cay Community Development District; and that the seal affixed to said instrument is the seal of Clearwater Cay Community Development District. STATE OF FLORIDA ) ) SS: COUNTY OF ) On this day of, 2006, before me, a notary public in and for the State and County aforesaid, personally appeared Stephanie Moore an authorized signatory of U.S. Bank National Association, as Trustee, who acknowledgedthatshedidsignsaidinstrumentassuchofficer for and on behalf of said corporation and that the same is her free act and deed as such officer and the free act and deed of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My Commission expires: Notary Public, State of Florida My Commission expires: Notary Public, State of Florida [NOTARIAL SEAL] [NOTARIAL SEAL] EXHIBIT A FORM OF 2006A BONDS No. RA-1 $33,840,000 UNITED STATES OF AMERICA STATE OF FLORIDA CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT CAPITAL IMPROVEMENT REVENUE BONDS, SERIES 2006A Interest Maturity Dated Rate Date Date CUSIP NO. Registered Owner: Principal Amount: 5.50% May 1, 2037 November 1, AA9 CEDE & CO. THIRTY-THREE MILLION EIGHT HUNDRED FORTY THOUSAND DOLLARS CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT, a community development district duly created, established and existing pursuanttochapter190, FloridaStatutes (the District ), for value received, hereby promises to pay (but only out of the sources hereinafter mentioned) to the registered Owner set forth above, orregisteredassigns, onthematuritydateshown hereon, unless this Bond shall have been called for redemption in whole or in part and payment of the Redemption Price (as defined in the Indenture mentioned hereinafter) shallhavebeendulymade or provided for, the principal amount shown above and to pay (but only out of the sources hereinafter mentioned) on the Maturity Date set forth above (or date of redemption, if earlier) and interest on the outstanding principal amount hereof from the most recent Interest Payment Date to which interest has been paid or provided for, or, if no interest has been paid, from the Dated Date shown above on November 1 and May 1 of each year (each, an Interest Payment Date ), commencing on May 1, 2007, until payment of said principal sum has been made or provided for, at the rate per annum set forth above. Notwithstanding the foregoing, if any Interest Payment Date is not a Business Day (as defined in the Indenture hereinaftermentioned), thenallamountsdueonsuch Interest Payment Date shall be payable on the first Business Day succeeding such Interest Payment Date, but shall be deemed paid on such Interest Payment Date. The interest so payable, and punctuallypaid or dulyprovided for, on any Interest Payment Datewill, asprovidedintheindenture (as hereinafter defined), be paid to the registered Owner hereofatthecloseofbusinessontheregular record date for such interest, which shall be the fifteenth (15th) day of the calendar month next preceding such Interest Payment Date, or, if such day is not a Business Day on the Business Day immediatelypreceding such day; provided, however, thatonoraftertheoccurrenceandcontinuance of an Event of Default under clause (a) of Section 902 of the Master Indenture (hereinafter defined), the payment of interest and principal or Redemption Price or Amortization Installments shall be made bythe Paying Agent (hereinafter defined) to such person, who, on a special record date which is fixed by the Trustee, which shall be not more than fifteen (15) and not less than ten (10) days prior to the date of such proposed payment, appears on the registration books of the Bond Registrar as the registered Owner of this Bond. Any payment of principal, interest or Redemption Price shall be made only upon presentation hereof at the designated corporate trust office of U.S. Bank National Association, as successor in interest to Wachovia Bank, National Association, located in Miami, Florida, or any alternate or successor paying agent (collectively, the Paying Agent ). Payment of interest shall be made by check or draft (or bywire transfer to the registered Ownersetforthaboveif such Owner requests such method of payment in writing on or prior to the regular record date for the respective interest payment to such account as shall be specified in such request, but only if the registered Owner set forth above owns not less than $1,000,000 in aggregateprincipalamountofthe 2006A Bonds, as defined below). Interest on this Bond will be computed on the basis of a 360-day year of twelve 30-day months. Capitalized terms used and not otherwise defined herein shall have the meaning ascribed to such terms in the Indenture hereinafter referred to. This Bond is one of a duly authorized issue of Bonds of the District designated Capital Improvement Revenue Bonds, Series 2006A (the 2006A Bonds ), issued in the aggregate principal amount of $33,840,000, under a Master Trust Indenture, datedasofdecember1, 2005 (the Master Indenture ), between the District and the initial Trustee, asamendedandsupplementedbya Second Supplemental Indenture, dated as of November 1, 2006 (the Supplemental Indenture ), between the District and the Trustee (the Master Indenture as amended and supplemented by the Supplemental Indenture is hereinafter referred to as the Indenture ). Theproceedsofthesaleofthe Bonds, together with other legally available funds, will be applied for the purpose of: (i) paying all amounts due with respect to those certain Bond Anticipation Notes, Series2005oftheDistrictdated December 1, 2005, currently outstanding in the aggregate principal amount of $30,650,000, which Notes were issued to finance the Cost of acquiring certain interests in land and acquiring and/or constructing certain infrastructure improvements; (ii) paying Capitalized Interest on the 2006A Bonds; (iii) funding the 2006 Reserve Account in an amount equal to the 2006 Reserve Account Requirement; and (iv) paying certain costs associated with the issuance of the 2006A Bonds. NEITHER THIS BOND NOR THE INTEREST AND PREMIUM, IF ANY, PAYABLE HEREON SHALL CONSTITUTE A GENERAL OBLIGATION OR GENERAL INDEBTEDNESS OF THE DISTRICT WITHIN THE MEANING OF THE CONSTITUTION AND LAWS OF FLORIDA. THIS BOND AND THE SERIES OF WHICH IT IS A PART AND THE INTEREST AND PREMIUM, IF ANY, PAYABLE HEREON AND THEREON DO NOT CONSTITUTE EITHER A PLEDGE OF THE FULL FAITH AND CREDIT OF THE DISTRICT OR A LIEN UPON ANY PROPERTY OF THEDISTRICTOTHERTHANASPROVIDED INTHEMASTER INDENTURE OR IN THE SUPPLEMENTAL INDENTURE AUTHORIZING THE ISSUANCE OF THE BONDS. NO OWNER OR ANY OTHER PERSON SHALL EVER HAVE THE RIGHT TO COMPELTHE EXERCISE OF ANY AD VALOREM TAXINGPOWEROFTHEDISTRICT OR ANY OTHER PUBLIC AUTHORITY OR GOVERNMENTAL BODY TO PAY DEBT SERVICE OR TO PAY ANY OTHER AMOUNTS REQUIRED TO BE PAID PURSUANT TO A-1 A-23 A-2

78 THE MASTER INDENTURE, THE SUPPLEMENTAL INDENTURE, OR THE 2006A BONDS. RATHER, DEBT SERVICE AND ANY OTHER AMOUNTS REQUIRED TO BE PAID PURSUANT TO THE MASTER INDENTURE, THE SUPPLEMENTALINDENTURE, ORTHE 2006A BONDS, SHALL BEPAYABLESOLELY FROM, ANDSHALLBESECUREDSOLELY BY, THE 2006 PLEDGED REVENUES AND THE 2006 PLEDGED FUNDS AND ACCOUNTS PLEDGED TO THE 2006A BONDS, ALL AS PROVIDED HEREIN, IN THE MASTER INDENTURE AND IN THE SUPPLEMENTAL INDENTURE. This Bond is issued under and pursuant to the Constitution and laws of the State of Florida, particularly Chapter 190, Florida Statutes, as amended, and other applicable provisions of law and pursuant to the Indenture, executed counterparts of which Indenture are on file at the corporate trust office of the Trustee. Reference is hereby made to the Indenture for the provisions, among others, with respect to the custody and application of the proceeds of 2006A Bonds issued under the Indenture, the collection and disposition of revenues and the funds charged with and pledged to the payment of the principal and Redemption Price of, and the interest on, the 2006A Bonds, the nature and extent of the security thereby created, the covenants of the District with respect to the levy and collection of 2006 Assessments, the terms and conditions under which the 2006A Bonds are or may be issued, the rights, duties, obligations and immunities of the District and the Trustee under the Indenture and the rights of the Owners of the 2006A Bonds, and, bythe acceptance of thisbond, the Owner hereof assents to all of the provisions of the Indenture. The 2006A Bonds are equally and ratably secured by the 2006 Trust Estate, without preference or priority of one Bond over another. The Supplemental Indenture does not authorize the issuance of any additional Bonds ranking on a parity with the 2006A Bonds. The 2006A Bonds are issuable only as registered bonds without coupons in current interest form in denominations of $5,000 or anyintegral multiple thereof (an Authorized Denomination ); provided, however, that the 2006A Bonds shall be delivered to the initial purchasers thereof onlyin aggregate principal amounts of $100,000 or integral multiples of Authorized Denominations in excess of $100,000 This Bond is transferable bythe registered Owner hereof or his dulyauthorized attorney at the designated corporate trust office of the Trustee in Miami, Florida, as Bond Registrar (the Bond Registrar ), upon surrender of this Bond, accompanied bya dulyexecuted instrumentof transfer in form and with guarantyof signature reasonablysatisfactorytothebondregistrar, subject to such reasonable regulations as the District or the Bond Registrar may prescribe, and upon payment of any taxes or other governmental charges incident to such transfer. Upon any such transfer a new Bond or 2006A Bonds, in the same aggregate principal amount as thebondor2006a Bonds transferred, will be issued to the transferee. At the corporate trust office of the Bond Registrar in Miami, Florida, in the manner and subject to the limitations and conditions provided in the Indenture and without cost, except for anytax or other governmental charge, 2006A Bonds may be exchanged for an equal aggregate principal amount of 2006A Bonds of the same maturity, of Authorized Denominations and bearing interest at the same rate or rates. The 2006A Bonds may, at the option of the District be called for redemption as a whole, at any time, or in part on any Interest Payment Date, on or after May 1, 2016 (less than all 2006A Bonds to be selected by lot), at a Redemption Price (expressed as percentages of principal amount) of 100% of the Outstanding principal amount thereof, without premium, plus accrued interest from the most recent Interest Payment Date to the redemption date. The 2006A Bonds are subject to mandatory redemption in part by the District by lot prior to their scheduled maturity from moneys in the 2006 Sinking Fund Account established under the Supplemental Indenture in satisfaction of applicable Amortization Installments (as defined in the Master Indenture) at the Redemption Price of the principal amount thereof, without premium, together with accrued interest to the date of redemption on May 1 of the years and in the principal amounts set forth below: Year Amortization Installments 2008 $ 455, , , , , , , , , , , , , , , ,035, ,095, ,160, ,225, ,295, ,365, ,445, ,525, ,610, ,705, ,800, ,900, ,010, ,120, * 2,240,000 * Maturity As more particularly set forth in the Master Indenture and Supplemental Indenture, any 2006A Bonds that are purchased by the District with amounts held to pay an Amortization Installment will be cancelled and the principal amount so purchased will be applied as a credit A-3 A-4 against the applicable Amortization Installment of the 2006A Bonds. AmortizationInstallmentsare also subject to recalculation, as provided in the Supplemental Indenture, as the result of the redemption of 2006A Bonds so as to reamortize the remaining Outstanding principal balance of the 2006A Bonds as set forth in the Supplemental Indenture. The 2006A Bonds are subject to extraordinary mandatory redemption prior to maturity, in whole on any date or in part on any Interest Payment Date, in the manner determined by the Bond Registrar at the Redemption Price of 100% of the principal amount thereof, without premium, together with accrued interest to the date of redemption, if and to the extent that any one or more of the following shall have occurred: (a) on or after the Date of Completion of the 2005 Project (as such term is defined in the Indenture), by application of moneys transferred from the 2006 Acquisition and Construction Account in the Acquisition and Construction Fund established under the Indenture to the 2006 Prepayment Subaccount of the 2006 Redemption Account in accordance with the terms of the Indenture; or (b) from Prepayments (as defined in the Indenture) deposited into the 2006 Prepayment Subaccount of the 2006 Redemption Account or from amounts transferred from the 2006 Reserve Account into the 2006 Prepayment Subaccount of the 2006 Redemption Accountafterthedepositto the 2006 Reserve Account of a Reserve Account Credit Instrument; or (c) from amounts on deposit in the 2006 Reserve Account, together with other moneys available therefor, sufficient to payand redeem all of the 2006A Bonds then Outstanding, including accrued interest thereon. If less than all of the 2006A Bonds shall be called for redemption, the particular 2006A Bonds or portions of 2006A Bonds to be redeemed shall be selected by lot by the Registrar as provided in the Indenture. Notice of each redemption of 2006A Bonds is required to be mailed by the Bond Registrar, postage prepaid, not less than thirty (30) nor more than forty-five (45) days prior to the redemption date to each registered Owner of 2006A Bonds to be redeemed at the address of such registered Owner recorded on the bond register maintained by the Bond Registrar. On the date designated for redemption, notice having been given and money for the payment of the Redemption Price being held bythe Paying Agent, all as provided in the Indenture, the 2006ABonds orsuchportionsthereof so called for redemption shall become and be due and payable at the Redemption Price provided for the redemption of such Bonds or such portions thereof on such date, interest on such 2006A Bonds or such portions thereof so called for redemption shall cease to accrue, such 2006A Bonds or such portions thereof so called for redemption shall cease to be entitled to any benefit or security under the Indenture and the Owners thereof shall have no rights in respect of such 2006A Bonds or such portions thereof so called for redemption except to receive payments of the Redemption Price thereof so held by the Paying Agent. Further notice of redemption shall be given by the Bond Registrar to certain registered securities depositories and information services as set forth in the Indenture, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in anymanner defeat the effectiveness of a call forredemptionifnoticethereofis given as above prescribed. The Owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any Event of Default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. Modifications or alterations of the Master Indenture, the Supplemental Indenture or of any indenture supplemental thereto may be made only to the extent and in the circumstances permitted by the Indenture. Anymoneys held bythe Trustee or anypaying Agent in trust for the payment and discharge of any 2006A Bonds which remain unclaimed for six (6) years after the date when such Bond has become due and payable, either at its stated maturity dates or by call for earlier redemption, if such moneys were held by the Trustee or any Paying Agent at such date, or for six (6) years after the date of deposit of such moneys if deposited with the Trustee or Paying Agent after the date when such Bond became due and payable, shall be paid to the District, andthereuponandthereafternoclaimant shall have any rights against the Paying Agent to or in respect of such moneys. If the District deposits or causes to be deposited with the Trustee funds or Federal Securities (as defined in the Indenture) sufficient to paythe principal or redemption price of any2006a Bonds becoming due at maturity or bycall for redemption in the manner set forth in the Indenture, together with the interest accrued to the due date, the lien of the 2006A Bonds as to the 2006 Trust Estate shall be discharged, except for the rights of the Owners thereofwithrespecttothefundssodeposited as provided in the Indenture. This Bond shall have all the qualities and incidents, including negotiability, of investment securities within the meaning and for all the purposes of the Uniform Commercial Code of the State of Florida. This Bond is issued with the intent that the laws of the State of Florida shall govern its construction. All acts, conditions and things required by the Constitution and laws of the State of Florida and the ordinances and resolutions of the District to happen, exist andbeperformedprecedenttoand in the issuance of this Bond and the execution of the Indenture, have happened, exist and have been performed as so required. This Bond shall not be valid or become obligatory for any purpose or be entitled to any benefit or security under the Indenture until it shall have been authenticated by the execution by the Trustee of the Certificate of Authentication endorsed hereon. A-5 A-24 A-6

79 IN WITNESS WHEREOF, Clearwater CayCommunityDevelopment District has caused this Bond to bear the signature of the Chairman of its Board of Supervisors and the official seal of the District to be impressed or imprinted hereon and attested bythe signature of the Secretary to the Board of Supervisors. CERTIFICATE OF VALIDATION This Bond is one of a Series of Bonds which were validated by judgment of the Circuit Court for Pinellas County, Florida, rendered on September 6, Attest: CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT Attest: CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT Secretary, Board of Supervisors By: Chairman, Board of Supervisors Secretary, Board of Supervisors By: Chairman, Board of Supervisors This Bond is one of the Bonds of the Series designated herein, described in the withinmentioned Indenture. Date of Authentication: U.S. BANK NATIONAL ASSOCIATION, as Trustee November, 2006 By: Authorized Signatory A-7 A-8 The following abbreviations, when used in the inscription on the face of the within Bond, shall be construed as though theywere written out in full accordingtoapplicablelawsorregulations. EXHIBIT B TEN COM TEN ENT JT TEN as tenants in common as tenants by the entireties with the right of survivorship and not as tenants in common as joint tenants with the right of survivorship and not as tenants in common FORM OF 2006 ACQUISITION AND CONSTRUCTION ACCOUNT REQUISITION NO. CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT CAPITAL IMPROVEMENT REVENUE BONDS, SERIES 2006A UNIFORM GIFT MIN ACT - Custodian under Uniform Gifts to Minors Act (Cust) (Minor) (State) Additional abbreviations may also be used though not in the above list. So long as the District maintains the book-entry only system for the Bonds, unless this certificate is presented by an authorized representative of The Depository Trust Company to the District or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by the authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, andherebyirrevocablyconstitutesand appoints, attorneyto transfer the said Bond on the books of the District, withfull power of substitution in the premises. Dated: Social Security Number or Employer Identification Number of Transferee: Signature guaranteed: NOTICE: Signature(s) must be guaranteed by an institution which is a participant in the Securities Transfer Agent Medallion Program (STAMP) or similar program. NOTICE: The assignor s signature to this Assignment must correspond with the name as it appears on the face of the within Bond in every particular without alteration or any change whatever. The undersigned, an Authorized Officer of the Clearwater Cay Community Development District (the District ) hereby submits the following requisition for disbursement from the 2006 Acquisition and Construction Account created under and pursuant to the terms of the Master Trust Indenture from the District to U.S. Bank National Association, as successor in interest Wachovia Bank, National Association, as trustee (the Trustee ), dated as of December 1, 2005, as supplemented by that certain Second Supplemental Indenture, dated as of November 1, 2006 (collectively, the Indenture ), (all capitalized terms used herein shall have the meaning ascribed to such terms in this Indenture); (A) Requisition Number: (B) Name of Payee: (C) Amount Payable: The undersigned hereby certifies that: 1. This requisition is for a Cost of the 2005 Project payable from the 2006 Acquisition and Construction Account that have not previously been paid; and 2. Each disbursement set forth above is a proper charge against the 2006 Acquisition and Construction Account. Each disbursement set forth above is made as payment of a portion of the purchase price payable for the 2005 Project as provided in the 2005 Acquisition Agreement, if applicable, and the undersigned represents with respect to the copy of the 2005 Acquisition Agreement on file with the Trustee, as applicable, that such agreement has not been modifiedoramendedandisinfullforceand effect on the date hereof. CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT By: Authorized Officer A-9 A-25 B-1

80 The undersigned, an authorized representative of the Consulting Engineer to the District hereby certifies that this disbursement is for a Cost of the 2005 Project, as applicable, and is consistent with: (i) the applicable acquisition or construction contract; (ii) the plans and specifications for the portion of the 2005 Project with respect to which such disbursement is being made; and (iii) the Engineer s Report. The undersigned further certifies that: (a) the amount to be paid to the Developer for the component of the 2005 Project that is the subject ofthis requisition is equal to or lessthanthecostof constructing the same by the Developer, including the value of any real property conveyed in connection therewith, (b) such component of the 2005 Project, is part of or necessaryfortheproject; (c) such component of the 2005 Project, has been installed or constructed in substantial conformity with the plans and specifications approved by the appropriate governmental entity and applicable laws governing the installation and construction of the same, and (d) the amount to be paid by the District for anyinterest in real propertywhich is the subject of this requisition is equaltoorlessthan the appraised value thereof, based on an appraisal by the District s appraiser. [CONSULTING ENGINEERS] EXHIBIT C FORM OF 2006A BONDS COSTS OF ISSUANCE ACCOUNT REQUISITION COST OF ISSUANCE REQUISITION NO. CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT CAPITAL IMPROVEMENT REVENUE BONDS, SERIES 2006A The undersigned, an Authorized Officer of the Clearwater Cay Community Development District (the District ) herebysubmits the following requisition for disbursement fromthecostsof Issuance Account created under and pursuant to the terms of the Master Trust Indenture from the District to U.S. Bank National Association, as successor in interest Wachovia Bank, National Association, as trustee (the Trustee ), dated as of December 1, 2005, as supplemented bya Second Supplemental Indenture dated as of November 1, 2006 (collectively, the Indenture ), (all capitalized terms used herein shall have the meaning ascribed to such terms in this Indenture): (A) Requisition Number: By: Name: Title: (B) (C) (D) Name of Payee: Amount Payable: Purpose for which paid or incurred: The undersigned hereby certifies that: 1. This requisition is for Costs of Issuance payable from the 2006 Costs of Issuance Accounts that have not previously been paid; and 2. Each disbursement set forth above is a proper charge against the 2006 Costs of Issuance Account. Attached hereto are originals of the invoice(s) from the vendor of the services rendered with respect to which disbursement is hereby requested. CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT By: Authorized Officer B-2 C-1 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] A-26

81 APPENDIX B FORM OF OPINION OF BOND COUNSEL

82 [THIS PAGE INTENTIONALLY LEFT BLANK]

83 [FORM OF BOND COUNSEL OPINION] November 20, 2006 Board of Supervisors Clearwater Cay Community Development District Pinellas County, Florida Re: Clearwater Cay Community Development District (City of Clearwater, Florida) $33,840,000 Capital Improvement Revenue Bonds, Series 2006A dated November 1, 2006 (the Series 2006A Bonds ) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by Clearwater Cay Community Development District (the Issuer ) of the above referenced Series 2006A Bonds. The Series 2006A Bonds are being issued pursuant to the Constitution and laws of the State of Florida, including particularly Chapter 190, Florida Statutes, as amended, and Ordinance No enacted by the City of Clearwater, Florida on September 15, 2005, which became effective September 23, 2005, as amended (collectively, the Act ) and Resolution No adopted by the Board of Supervisors of the Issuer (the Board ) on November 28, 2005, as supplemented by Resolution No adopted by the Board on September 17, 2006 (collectively, the Resolution ). The Series 2006A Bonds are being further issued and secured by a Master Trust Indenture dated as of December 1, 2005 between the Issuer and U.S. Bank National Association, as successor in interest to Wachovia Bank, National Association, as trustee (the Master Indenture ), as supplemented by a Second Supplemental Trust Indenture dated as of November 1, 2006 between the Issuer and the Trustee (the Supplemental Indenture and, together with the Master Indenture, the Indenture ). We have examined the Act, the Resolution, the Indenture, the proceedings for validation in Case No CI in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida and such certified copies of the proceedings of the Issuer and such other documents as we have deemed necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Issuer contained in the Resolution and the Indenture and in the certified proceedings and other certifications and representations of public officials and others which have been furnished to us without undertaking to verify such certifications or representations by independent investigation. Based on the foregoing, we are of the opinion that: 1. The Indenture has been duly authorized, executed and delivered by the Issuer. The Indenture creates a valid pledge of the 2006 Trust Estate and constitutes a valid and binding obligation of the Issuer enforceable in accordance with its terms. B-1

84 Board of Supervisors November 20, 2006 Page 2 of 2 2. The issuance and sale of the Series 2006A Bonds has been duly authorized by the Issuer, and the Series 2006A Bonds constitute valid and binding special limited obligations of the Issuer, payable in accordance with, and as limited by, the terms of the Indenture. 3. Interest on the Series 2006A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, such interest is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on certain corporations under the Internal Revenue Code of 1986, as amended (the Code ). The opinion set forth in the preceding sentence is subject to the condition that the Issuer complies with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2006A Bonds in order for interest on the Series 2006A Bonds to be excluded from gross income for federal income tax purposes. The Issuer has covenanted in the Indenture to comply with such requirements. Failure to comply with certain of such requirements may cause interest on the Series 2006A Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2006A Bonds. 4. The Series 2006A Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of This opinion is qualified to the extent that the rights of the holders of the Series 2006A Bonds and the enforceability of the Series 2006A Bonds and the Indenture may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally, now or hereafter in effect, and by the exercise of judicial discretion in appropriate cases in accordance with equitable principles. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Limited Offering Memorandum or other offering material relating to the Series 2006A Bonds (except to the extent, if any, stated in the Limited Offering Memorandum) and we express no opinion relating thereto (except only the matters set forth as our opinion in the Limited Offering Memorandum). Further, we express no opinion regarding tax consequences arising with respect to the Series 2006A Bonds other than as expressly set forth herein. Respectfully submitted, RUDEN, McCLOSKY, SMITH, SCHUSTER & RUSSELL, P.A. B-2

85 APPENDIX C ENGINEER S REPORT

86 [THIS PAGE INTENTIONALLY LEFT BLANK]

87 Amended and Restated Engineer s Report for Master Infrastructure Prepared for: Board of Supervisors Clearwater Cay Community Development District 2704 Via Murano Clearwater, Florida Board Members: David Schwarz Gary Schwarz Darcy Edwards Shawn Ward James Dempsey Engineers: Bayside Engineering 1105 East Twiggs Street Tampa, Florida October, 2006 FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 1

88 Table of Contents Section Page 1. INTRODUCTION Purpose and Scope of the Report Description of the Proposed Development Description of the Clearwater Cay Community Development District DISTRICT BOUNDARIES AND PROPERTIES SERVED District Boundaries Description of Properties Served Existing Development and Infrastructure ACQUISITION OF EXISTING INFRASTRUCTURE Water and Sewer Utilities and Stormwater Management Existing Roadways, Street Lighting and Landscaping Parking (Surface) Bay Promenade and Related Amenities PROPOSED DISTRICT INFRASTRUCTURE Water, Sewer and Underground Utilities Stormwater Management Roadways, lighting, landscaping and hardscaping Recreational Amenities Parking (surface) Contingencies and soft costs Status of Design and Construction Activities LANDS ACQUIRED SUMMARY TABLE OWNERSHIP AND MAINTENANCE RESPONSIBILITY OPINION OF COSTS PERMITS Existing Entitlements BENEFIT REFERENCES...24 Tables Table 1 Existing Infrastructure Acquired (BAN Project)...9 Table 2 Proposed District Infrastructure...12 Table 3 Land Acquired (BAN Project)...16 Table 4 Summary Table...18 Table 5 Construction/Funding, Ownership and Maintenance Responsibility...19 FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 2

89 Table 6 Permit Matrix...20 Table 7 Future Permit Matrix...21 Referenced Exhibits Exhibit 1 Exhibit 2 Exhibit 3 Exhibit 4 Exhibit 5 Exhibit 6 Exhibit 7 Exhibit 8 Exhibit 9 Exhibit 10 Exhibit 10a Exhibit 10b Exhibit 10c Exhibit 10d Exhibit 10e Exhibit 10f Exhibit 10g Exhibit 11 Exhibit 12 Exhibit 13 Exhibit 14 Exhibit 15 Exhibit 16 Exhibit 17 Exhibit 18 Exhibit 19 Exhibit 20 Exhibit 21 Exhibit 22 Exhibit 23 Exhibit 24 Location Map Aerial with Boundary Underlying Property Identification Sketch and Legal Descriptions Legal Descriptions Water Master Plan Sanitary Sewer Master Plan Storm Sewer Master Plan Existing Easements & Right-of-Way Proposed Conceptual Master Plan Key Sheet Proposed Conceptual Master Plan Proposed Conceptual Master Plan Proposed Conceptual Master Plan Proposed Conceptual Master Plan Proposed Conceptual Master Plan Proposed Conceptual Master Plan Proposed Conceptual Master Plan New/Existing Roadways Bay Promenade & Conservation/Navigable Waterways Parking Garages Recreational Water Feature/Dockage Proposed Water Park Recreational Water Feature - Gondola, Canal & Pond Harborside - Surface Parking Conversion Overall - Commonwealth - Surface Parking Conversion Roadway - Commonwealth - Surface Parking Conversion Sidewalk/Hardscape - Commonwealth - Surface Parking Conversion Water Features Commonwealth - Surface Parking Conversion Stormwater Management Commonwealth - Surface Parking Conversion Drainage/Utility Easement Commonwealth - Surface Parking Conversion Overall Project Sub Projects FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 3

90 1. INTRODUCTION 1.1 Purpose and Scope of the Report This report amends and restates, in its entirety, that certain Amended and Restated Engineer s Report for Master Infrastructure dated November, 2005 prepared by PBS&J (the Original Report ). The Original Report described the existing community and infrastructure within the boundaries of the Clearwater Cay Community Development District (the District ) and the proposed development plan serving the mixed use community within the District s boundaries. The Original Report also identified the interests in land to be acquired by the District and the capital improvements to be constructed and/or acquired by the District (the BAN Project ) with proceeds of its Bond Anticipation Notes, Series 2005 (the Notes ) and certain additional capital improvements (the Future Projects ) that might be undertaken by the District subsequent to the issuance of the Notes. The District issued the Notes in The District now plans to issue its Capital Improvement Revenue Bonds, Series 2006 (the Series 2006 Bonds ) to permanently finance the BAN Project, by paying the principal of the Notes, together with interest accrued thereon at or prior to their maturity date. The BAN Project included the acquisition of certain interest in land, as well as the acquisition of existing infrastructure improvements and the construction and/or acquisition of proposed infrastructure improvements. At or around the time the Notes were issued, the District applied proceeds of the Notes to acquire the land and existing infrastructure improvements included in the BAN Project. Proceeds of the Notes have been applied to construct and/or acquire a portion of the proposed infrastructure improvements included in the BAN Project. Remaining unexpended proceeds of the Notes will be applied to complete the construction and/or acquisition of these proposed infrastructure improvements. The District does not intend to undertake the financing of any of the Future Projects at the present time although it may issue bonds in the future for that purpose. This amended and restated report (the Report ) updates the Original Report to, generally, (a) provide current cost estimates for the proposed infrastructure improvements included in the BAN Project (b) identify the status of construction of the proposed infrastructure improvements included in the BAN Project, and (c) update information regarding the overall development plan for the community within the District s boundaries. The Original Report otherwise remains unchanged. Costs for the capital improvements and acquisitions have been apportioned over the properties to be assessed within the District. The financing and assessment methodology were developed by the District s financial consultant. 1.2 Description of the Proposed Development The District is located in the City of Clearwater (the City ), overlooking Tampa Bay and the Bayside Bridge from its eastern boundary on the western shore of upper Tampa Bay. The project is also located on US 19 along the District s western boundary. Exhibit 1 is a Location Map for the District. FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 4

91 The District consists of approximately 49.4 acres (rounded) made up of several development parcels. The District Boundary is depicted on Exhibit 2 which includes an aerial photograph of the site. The overall District and individual parcels that make up the District are identified on Exhibit 3 Underlying Property Identification. The first parcel, known as Commonwealth, is 16.3 acres which is proposed for redevelopment as a multi-use facility with a significant lake feature and an existing small mid-rise office building. Redevelopment activities have been initiated by demolition of buildings not planned for rehabilitation or improvements, site clearing and some drainage feature construction. The second parcel is known as Harborside and consists of approximately 9.1 acres, of which 1.6 acres are tidal waters and conservation area. This site contains a mid-rise office building. The redevelopment of this parcel is proposed to include the construction of a parking structure and water park. No redevelopment of this parcel has been initiated. The third parcel is known as Grand Venezia and consists of 24.1 acres, of which 7.4 acres are tidal waters and conservation area. This site contains 12 mid-rise condominium buildings and a clubhouse/pool facility. The site currently contains an aggregate of 336 condominium units. Redevelopment, within the Grand Venezia parcel is proposed to consist of roadway resurfacing and replacement of deteriorated seawalls where necessary. A new docking facility is under consideration for construction as well. Proposed improvements are discussed in detail within Section 4. The subject areas within the District will be re-developed in a Venetian theme, to be consistent with the existing Grand Venezia Property. The composite development will consist of approximately 1100 residential units of various types. Also planned are 150,000 square feet (SF) of retail facilities and 150,000 SF of office facilities. The new multi-use development is anticipated to contain three parking structures with approximately 2000 new parking spaces and a marina facility with approximately 200 new wet slips for boat docking. The District is designed to include a destination resort community with a variety of residential housing options and accessory uses customarily found in a waterfront resort community, including: a hotel, restaurants, retail space, swimming pools, waterpark, clubhouses and convention facilities. The District will be developed as a single community which will accommodate differing housing opportunities. Design guidelines and an integrated plan for landscaping, signage, utility service, stormwater management, and community services will tie the various development parcels together, creating a viable resort community structure, while providing for individual identity in the residential areas. Residential units range from townhouses to multi-story condominiums. FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 5

92 1.3 Description of the Clearwater Cay Community Development District The District has been established in Accordance with the Uniform Community Development District Act of 1980, Chapter 190 of the Florida Statutes. The District is a separate special purpose local government with the authority to provide public services and facilities within a limited land area. The District will encompass acres. The boundary of the District, as approved by ordinance of the City of Clearwater s City Commission on September 15 th, 2005, as amended on January 19, 2006, is included within this report as Exhibit 4 Sketch and Legal Description. The Legal Description is repeated as Exhibit 5 Legal Description for use in future documentation of the District. 2. DISTRICT BOUNDARIES AND PROPERTIES SERVED 2.1 District Boundaries The District is generally bounded by Tampa Bay to the east, Allan s Creek to the south, US 19 to the west, and developed lands to the north (Exhibit 4). 2.2 Description of Properties Served The District is located within a portion of Sections 20 and 29, Township 29 South, Range 16 East, Pinellas County, Florida. The District consists of three main parcels as noted above and depicted on Exhibit 4 Sketch and Legal Description. Individual ownership of separate parcels is depicted in Exhibit 3 underlying property Information as referenced above. The terrain is generally flat with elevations ranging from 11.0 feet NGVD in the developable areas to below sea level within the included waterways. The ground water is generally influenced by the tidal waters of Tampa Bay. Due to the bay front nature of the property and the fact that the land is either developed with stormwater permits (the parcels related to Grand Venezia and Harborside) or virtually impervious (the parcel related to the shopping center) storm water storage for runoff attenuation is not required. Only stormwater retention for water quality treatment is required for the area in which the existing shopping center is located. Finish floor elevations for habitable structures must be set based on Flood Insurance Rate Maps (FIRM) which are generated through FEMA. Development within the District will require finished floors of habitable structures to be set above 10 feet elevation and shall be based on the site specific FIRM. A proposal conceptual master plan, delineating both existing to be retained and proposed uses of lands within the district, has been prepared as Exhibit 10a 10g Proposed Conceptual Master Plan. This master plan has been subdivided to fit 8 ½ inch by 11 inch sheets of paper. To enhance the legibility of the Exhibit, the scale was retained and we have included sub-exhibits 10A through 10F which include match lines to assemble the overall figure for an overview of the site while FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 6

93 maintaining legibility. This should allow the reader to determine what existing and proposed improvements are depicted in the Master Plan. The majority of the existing or proposed land uses are reflected on one or more of the Exhibits. 2.3 Existing Development and Infrastructure Master plans for the utility systems including existing water, sanitary sewer, and stormwater utilities located within the District and adjacent property have been prepared and developed into graphic figures. These figures include the following: Exhibit 6 Master Water System Exhibit 7 Master Sanitary Sewer System Exhibit 8 Master Stormwater System The reader is directed to recognize these figures depict the existing systems currently in place and reflect private or public ownership in accordance with the references provided within this report and the legend indicated within each Exhibit. The Commonwealth parcel is located along the northern boundary of the District. The property was previously developed as a shopping center, consisting of an anchor tenant building and multiple building sub-areas, constructed with common wall methods, for additional retail tenants. A small office building is also located on this site. The present intent of the master developer is to secure the interests of an anchor tenant and finalize plans incorporating specific tenant needs and optimal land use. Demolition of the shopping center is substantially complete. The site includes a large surface parking area with related circulation features and certain underground utilities for water, sanitary sewer, gas, electric and stormwater drainage. The site maintains access frontage along US 19 and to Belleair Road to the south. The northern property line is encumbered by two drainage/utility easements and a City of Clearwater right of way easement (Exhibit 9 Existing Easement and Right of Way). These onsite easements have utility lines for water, sanitary sewer, gas, electric and stormwater drainage facilities within their boundaries. Master utility system exhibits referenced above also depict easements for clarity. As may be noted from those Exhibits, City Utilities are located within the various easements. Currently there are water, sanitary sewer (30 forcemain) and drainage facilities within the northern easements. The property s internal stormwater facilities are limited to capture and conveyances. No stormwater retention is provided on site. This site also contains a utility easement along its eastern boundary, which, among other utilities as noted above, contains a lift station owned by the City of Clearwater. The western boundary maintains utility easements as well, including a 50 foot wide easement for a 36 water transmission main owned by the City of St. Petersburg. The southern boundary of this property also maintains an easement which is dedicated as a right of way easement to the City of Clearwater. The sanitary sewer utilities located internal to the property are owned by the City of Clearwater. It must be noted that no existing, City-owned FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 7

94 utilities within this site are included in the existing infrastructure value calculations included within this report. The existing Harborside site contains a mid-rise office building. The building is located in the center of the site. The east and west ends of the site contain vehicular circulation and surface parking areas as well as storm water drainage facilities. Underground water, sanitary sewer, electric and stormwater drainage facilities are present within the site. The 36 water transmission main is located within a continuation of the 50-foot wide easement traversing the site s western half at a slight angle. The northernmost boundary of the site contains Belleair Road which is privately owned and dedicated as an ingress/egress easement to abutting property owners. This private roadway was acquired by the District with proceeds of the Notes. Utilities located within the road include water, sanitary sewer, gas, electric and stormwater facilities. The potable water and sanitary sewer facilities within the road are owned by the City of Clearwater. The existing development in the District known as Grand Venezia, located on the eastern most portion of the District, includes 12 multi-story mid-rise buildings with 336 condominium units, a recreation center and tennis facility. The site also maintains two roads along with numerous walkways in and around the property. The roads, Via Murano and Via Capri, provide access to all multi-family residences located on the site and are proposed for acquisition by the District. The property includes water, sanitary sewer, gas, electric and stormwater facilities along the existing roadways. The underground infrastructure is privately owned except for the water supply system which is owned by the City. The property also includes 2,900 linear feet of seawall abutting Tampa Bay. Again, no City-owned (City of Clearwater or St. Petersburg) infrastructure is proposed for acquisition by the District nor are their quantities included in valuations of utilities to be acquired by the District. 3. ACQUISITION OF EXISTING INFRASTRUCTURE The District applied proceeds of the Notes to acquire certain existing improvements as shown on Table 1, by parcel, or with respect to Belleair Road, together with associated costs. The acquisition costs were determined based upon 2005 costs for new construction, with a depreciation applied for surface improvements that could be inspected. This method is a standard practice within the engineering profession. As an example of discounting as asset value, landscaping within the Commonwealth parcel appeared to have experienced deferred maintenance. The condition of this landscape was inferior and the unit value was adjusted downward to reflect this deteriorated state. FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 8

95 Category Table 1 Existing Infrastructure Acquired (BAN Project) Commonwealtside Harbor- Belleair Grand Road Venezia Total (1) Waste/Sewer $0 $ $21,750 (2) $484,700 (3) $673,300 Utilities Stormwater Management $209,650 $93,700 $36,650 (2) $479,825 (3) $819,825 Roadways/Street Lighting/ $1,792,404 (3) $1,958,605 (4) $0 $0 $166,201 (2) Parking (surface) /3.9 acres $0 $1,309,430 $0 $2,475,225 (3) $3,784,655 Bay Promenade and related amenities $0 $0 $0 $304,000 $304,000 Total $209,650 $1,569,980 $224,601 $5,536,154 $7,540,385 (1) Excludes cost of related interests in land to be acquired. See Table 3. (2) Costs will not be assessed to Grand Venezia or Harborside property. (3) Costs will not be assessed to Grand Venezia property. (4) Landscaping includes hardscapes such as sidewalks around parking lots and walkways connecting buildings but does include landscaping within a ten foot perimeter of the buildings. 3.1 Water and Sewer Utilities and Stormwater Management The District acquired all existing water, sanitary sewer and stormwater utilities located within the District. Utilities which are proposed for replacement were not included in the valuation and the District did not acquire these facilities. The water facilities are owned by the service provider, the City of Clearwater. Utility ownership is included on Exhibit 6 Water Master Plan and can be determined from the exhibits legend. Utility easements are reflected on the map and typically coincide with ownership of the utility. Sanitary and storm sewer facilities located within the District are depicted on Exhibit 7 Sewer Master Plan and Exhibit 8 Stormwater Master Plan. Similarly, ownership is depicted in accordance with the exhibit s legend and easements are reflected on the figures. City-owned utilities are not included within the utilities acquired by the District. 3.2 Existing Roadways, Street Lighting and Landscaping The existing roadways were privately owned by the Developer prior to issuance of the Notes. These roads consist of Belleair Road as it transects the CDD from the Florida Department of Transportation right of way at US 19 on the western District boundary to the Venezia access on the east end of the roadway. Separately, FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 9

96 Venezia contains two private roads, Via Capri and Via Murano. These existing roadways/areas were acquired by the District with proceeds of the Notes and continue to be owned by the District. These existing roadways generally consist of two-lanes with curb and gutter, landscaping, street lighting and signage. The portion of Belleair Road adjacent to US 19 consists of 3 or 4 lanes to enhance access to the site(s). In the aggregate, the existing roadways acquired by the District consist of approximately 2,600 lineal feet. In addition, the existing street lighting and landscaping in these roadways were acquired by the District with proceeds of the Notes. These existing roadways are depicted and differentiated from proposed roadways within Exhibit 11 Existing and Proposed Roadways. 3.3 Parking (Surface) The District acquired several existing paved asphalt parking areas within the District boundaries. Existing surface parking uses which will remain as surface parking are depicted on Exhibit 10. Of the total acres of surface parking existing within the District, 3.9 acres were acquired by the District and continue to be used as surface parking (1.4 acres in the Harborside parcel and 2.5 acres in the Venezia parcel) and 3.6 acres (in the Commonwealth parcel) were acquired by the District for future use as roads, hardscape, a portion of the gondola canal and pond, stormwater management and drainage and utility easements, which project costs are described below under Proposed District Infrastructure. The costs associated with the existing improvements located on the acres that were acquired by the District and used for purposes other than surface parking have not been included. Existing surface parking proposed for other uses is depicted on Exhibits 18 through 23 for the Commonwealth property. 3.4 Bay Promenade and Related Amenities The Bay Promenade, which is a pedestrian walkway along Tampa Bay, was acquired by the District for public use (as shown on Exhibit 12). The District assumed the ongoing maintenance responsibility for those facilities. 4. PROPOSED DISTRICT INFRASTRUCTURE The proposed District infrastructure will generally consist of the following categories: 1. Water, sewer and underground utilities 2. Stormwater management 3. Roadways, street lighting, landscaping and hardscaping 4. Recreational amenities 5. Parking (surface) 6. Contingency and soft costs These projects are depicted on Exhibit 24 Overall Projects/ Subprojects. FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 10

97 Proceeds of the Notes have been applied to acquire the existing infrastructure improvements noted above and the interests in land noted below in Table 3. Proceeds of the Notes have been and will be applied to finance the construction and/or acquisition of the proposed infrastructure improvements shown below in Table 2 under the heading BAN Project. As noted above, the District will issue the Series 2006 Bonds to permanently finance the entire BAN Project. The District does not intend to undertake the financing of the Future Projects at the present time, although it may issue bonds in the future to finance the construction and/or acquisition of all or a portion of the Future Projects. Only those proposed improvements and related interests in land included in the Future Projects described below that are determined by District Counsel, in consultation with the District s Bond Counsel, to be eligible for tax-exempt financing will be acquired and/or constructed by the District. Design and/or construction of the proposed infrastructure improvements included in the BAN Project were commenced in mid 2006 with substantial completion currently expected by June The Future Projects are expected to be substantially complete by December Table 2 below sets forth a summary of the proposed infrastructure improvements included in the BAN Project, together with updated construction cost estimates for those proposed improvements and the improvements included in the Future Projects. As of October 15, 2006, the District has expended approximately $ 824,000 in connection with the acquisition and/or construction of the proposed infrastructure improvements included in the BAN Project shown below. To the extent the remaining proceeds of the Notes are insufficient to permit the District complete any portion of the proposed infrastructure improvements included in the BAN Project shown below, the Developer has agreed in writing with the District to complete and convey such portions of the BAN Project to the District, or to provide funds to the District to permit it to complete such portions. FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 11

98 Table 2 Proposed District Infrastructure Construction Amount Expended Through Infrastructure Category BAN Project* 10/15/06 Future Projects* Total* Water, Sewer, U/G Utilities $1,700,000 $0 $1,700,000 Stormwater Management Facilities $2,300,000 $96,000 $2,396,000 Roadway, Lighting, Landscaping, Hardscaping $2,400,000 $0 $2,400,000 Seawalls $144,000 $0 $144,000 Recreational Amenities Public Dock $400,000 $0 $400,000 Walkway from public dock around water park Demolition of a portion of shopping center in Commonwealth parcel relating to area to be used as water features $270,000 $0 $270,000 $950,000 $824,000 $0 $950,000 Other Recreational Amenities $0 $23,040,915 $23,040,915 Parking (surface) $330,000 $0 $330,000 Contingency and Soft Costs $1,178,552 $3,470,537 $4,649,089 Subtotal $9,672,552 $824,000 $26,607,452 $36,280,004 *Costs set forth from Original Report adjusted for certain individual line items to accommodate potential site modifications; total costs remain unchanged. FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 12

99 4.1 Water, Sewer and Underground Utilities The utilities funded by the District will primarily consist of water and wastewater to serve the properties and proposed projects identified within the district. The District will also fund the cost differential for underground installation of electric utilities. The District is located within the City of Clearwater water and wastewater utilities service area (Exhibit 3). The water and wastewater systems will be designed and constructed in accordance with the City of Clearwater and Florida Department of Environmental Protection standards and will be owned and maintained by the City of Clearwater and/or the District. The potable water facilities will include distribution mains along with necessary valves, fire hydrants and water services up to the private property lines of the end users. The existing 12 inch main located on the north property boundary and the 8 inch line along Belleair Road in and of themselves are anticipated to be inadequate to serve the needs of the project at build out. In order to maintain adequate capacity for potable water demand and fire flows at the proposed fire hydrants and buildings; new water main connections are proposed to be installed to loop the system. The construction of the water main(s) will be coordinated with proposed redevelopment of the site. The majority of the on-site mains will be 10 with the exception of the fire hydrant connections and the City of Clearwater transmission main(s) (Exhibit 6). The wastewater facilities will include gravity collection mains, pump stations, force mains, and individual sewer services to each of the buildings. The existing pump station is expected to require upgrade to accommodate the increased demand of the proposed development. New gravity collection systems will be installed where needed to provide service to redeveloped areas of the project that will require service. Several portions of the existing system will not provide adequate service based on the proposed land use plan. These lines will be temporarily rerouted while the existing system is removed and replaced. Due to development logistics, two small lift stations are anticipated for development of the north east portion of the site and to pick up remote areas currently served by the existing gravity system (Exhibit 7). 4.2 Stormwater Management The drainage and stormwater management facilities will consist of a stormwater retention area, inlets, manholes and stormwater pipes that direct runoff to the on-site retention area for water quality treatment prior to discharge. The cost of demolishing a portion of the existing structures in the Commonwealth Shopping Center parcel related to the stormwater FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 13

100 management system is included in the cost of the stormwater management system (Exhibits 10a, 10c, & 10g). 4.3 Roadways, lighting, landscaping and hardscaping Construction or improvement of the roadways and circulation lanes will consist of sub-base, base, curbing, sidewalks, signing, striping, lighting and landscape/hardscape. Approximately 1900 linear feet of new roadways are anticipated to be constructed within the District boundary. These are depicted on Exhibit 11 Existing and Proposed Roadways. The pavement surface may vary and could be asphalt, concrete or brick pavers as appropriate for the location and design theme in the area. Other public District areas will also include landscaping, hardscaping, lighting and other decorative amenities along roadways or other public areas. The roadways will be designed and constructed in accordance with the applicable City of Clearwater or Florida Department of Transportation standards as appropriate. Improvement of existing roadways will consist of resurfacing at a minimum, with new or reconstructed landscaping, hardscaping, lighting and signage. Within the Venezia property, it is expected that only resurfacing will be performed. Remaining roadways to be improved consist of Belleair Road, which is also proposed for similar improvements with brick pavers being anticipated for surface treatment. The existing road connection to US 19 at Belleair Road (Exhibits 17 & 24) will be modified as needed to serve the CDD property and maintain access to the properties to the east. All the existing roads are currently maintained by the Developer. All District roadways and travel lanes, existing, improved or newly constructed within the District boundaries will be owned and maintained by the District. All on-site District roadways will be constructed within rights-of-ways or easements acquired and owned by the District. Off-site roadway improvements are not anticipated at this time. 4.4 Recreational Amenities Currently, the District intends to construct two new recreational amenities at the Harborside property and one amenity at the Commonwealth Shopping Center property. The Harborside amenities are proposed to consist of a water park, a seawall and a boardwalk and public dock accessing the navigable waterway adjacent to the Harborside parcel. The location of these proposed amenities are depicted on Exhibit 14 Proposed Recreational Water Feature/Dockage and Exhibit 15 Proposed Water Park. The proposed Commonwealth parcel amenity includes a gondola canal and pond with an internal promenade. The location of this proposed amenity is depicted on Exhibit 16 Recreational FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 14

101 Water Feature (Gondola Canal and Pond). The cost of demolishing a portion of the existing structures in the Commonwealth parcel related to the water park will included in the cost of the recreational amenities. Other recreational amenities anticipated for the District may be developed at a later date but at this point have not been identified. 4.5 Parking (surface) Approximately 1.4 acres of existing surface parking (Exhibit 17) acquired by the District in the Harborside parcel will be renovated by milling, resurfacing, restriping and refurbishing the landscaping associated with the parking area and providing lighting. A permit is not anticipated for the work associated with the parking lot renovation. 4.6 Contingencies and soft costs A ten percent contingency was added to each construction cost line item and a fifteen percent technical services cost are added to the cost of the proposed improvements noted above. Technical services include the planning, land surveying, engineering, environmental permitting, and landscape architecture services necessary for the design, permitting, and services during construction for the District s infrastructure. The costs do not include the legal, administrative, financing, operation, or maintenance services cost which are necessary to finance, construct, and operate the district s infrastructure. 4.7 Status of Infrastructure Design and Construction Activities The design and construction activity has been advancing with a strategic approach allowing for potential site variations while focusing on the anticipated adaptation for the anchor tenant. Consequently construction of the prposed improvments included in the BAN Project has not commenced, and activity related thereto has been concentrated on site clearing, earthwork, utility clearing and demolition under the recreational amenities category. 5. LANDS ACQUIRED Table 3 shows the land acquired by the District with proceeds of the Notes, its existing use and location and its proposed use. The costs associated with the land acquired were based on information provided by an appraisal obtained by the District. The District acquired the land through fee title or easement. FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 15

102 Existing Use Grand Venezia Locations Commonwealth Table 3 Land Acquired (BAN Project) Harborside (3) Total Area (Ac) Proposed Use Roadways 1.82 (1) Roads Bay Promenade Landscaping Stormwater Management Land Under Ex. Buildings To be Demolished Utilities Water & Sewer Parking 2.52 (1) Same as Existing Roads Hardscape Recreational Amenities Landscaping Same as Existing Landscaping Roads Recreational Amenities Stormwater Management Hardscape Utility Easement Same as Existing Roads Hardscape Recreational Amenities Stormwater Management Utility Easement Landscaping Same as Existing (2) Appraised Value (4) (dollars) District Land Acquisition Cost (7) $599, (5) $3,675, (6) $299, $1,837, $2,382, $1,191, $648, (5) $8,723, (6) $324, $4,361, $550, (5) $275, $2,725, (5) $1,362, $348, (5) $174, $3,491, (5) $5,088, (6) $1,745, $2,544, Subtotal $28,232, $14,116, (1) Costs will not be assessed to Grand Venezia and Harborside property. (2) The existing Surface Parking for Harborside and Grand Venezia will have the same proposed use. Costs for Grand Venezia parking will not be assessed to Grand Venezia. (3) Harborside includes the Belleair Road lands. (4) The value per acre within Grand Venezia was derived by dividing the total appraised value of land being sold to the CDD ($19,869,231) by the total acreage sold to the CDD (9.84 Ac.) all values are taken from the complete summary appraisal report dated September, (5) Commercial Land Values for Harborside and Commonwealth property per appraisal report valued at $696,960 per acre. (6) Residential Land Values for Grand Venezia property per appraisal report valued at $2,019,230 per acre. (7) The District acquired the land for 50% of its appraised value. FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 16

103 6. SUMMARY TABLE Category Water/Sewer Utilities/Cost Differential for UG electric Existing Infrastructure* Table 4 Summary Table BAN Project Proposed Infrastructure** Future Projects** Total** $673,300 $1,700,000 $0 $2,373,300 Stormwater Management $819,825 $2,300,000 $96,000 $3,215,825 Roadways/ Street Lighting/ Landscape/ Hardscape Parking (surface) Seawalls $1,958,605 $2,400,000 $0 $4,358,605 $3,784,655 $330,000 $0 $4,114,655 $0 $144,000 $0 $144,000 Bay Promenade and related amenities $304,000 $0 $0 $304,000 Demolition in Commonwealth Recreational Amenities Public Dock Public Walkway $0 $950,000 $400,000 $270,000 $0 $23,040,915 $0 $0 $24,660,915 Contingency and Soft Costs $1,178,552 $3,470,537 $4,649,089 Land Acquisition (BAN Project only) $14,116,375 $14,116,374 Subtotals $21,656,760 $9,672,552 BAN Project Totals $31,329,312 FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Future Project Totals $26,607,452 BAN Project and Future $57,936,764 Project Total *Previouly acquired by District **Costs set forth from Original Report adjusted for certain individual line items to accommodate potential site modifications; total costs remain unchanged. Page 17

104 7. OWNERSHIP AND MAINTENANCE RESPONSIBILITY The ownership and maintenance responsibilities for the various elements of the infrastructure will be undertaken by the entities identified in Table 5. This includes improvements to be acquired or constructed by the District. Table 5 Construction/Funding, Ownership and Maintenance Responsibility Improvement Facility Construction/ Funding Ownership Operation & Maintenance Water, Sewer and Underground Utilities District District/City District/City Stormwater Management District District District Roadways, lighting, landscaping and hardscaping District District District Parking (Surface) District District District Canals and docks District District District Recreational amenities District District District 8. OPINION OF COSTS Except as noted, the infrastructure acquisition costs herein were derived from quantity estimates of existing infrastructure items multiplied by current estimates of unit costs with depreciation factors considered. The new construction costs are derived from expected quantities of infrastructure multiplied by current unit costs typical of the industry in the area. Given the preliminary nature of the design sufficient quantities have been accounted to accommodate potential variances in site and infrastructure layout. Additionally, a ten percent construction contingency is added to all new construction costs. To the subtotals, fifteen percent technical services are added which includes the planning, land surveying, engineering, environmental permitting, and landscape architecture services necessary for the design, permitting, and services during construction for the District s infrastructure. The costs do not include environmental impact mitigation to the site or building there on, or the legal, administrative, financing, operation, or maintenance services necessary to finance, construct, and operate the District s infrastructure. FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 18

105 9. PERMITS Permits and/or agency approvals have been acquired for existing infrastructure improvements throughout the District. Permits for new construction are required prior to the start of construction. The permits and approvals required to be obtained (which have not heretofore been obtained), in general, include the following: City of Clearwater Flex Plan Approval Dredge and fill by the Army of Corps of Engineers and the Florida Department of Environmental Protection South Florida Water Management District Surface Management Permit Environmental Protection Agency NPDES Florida Department of Environmental Protection Waste Water Collection and Transmission System Permit Pinellas County Health Unit Potable Water System extension, General Permit Local development agreement Pinellas County Water Navigation Authority Permit Pinellas County Habitat Management Permit City of Clearwater o Preliminary Site Plan o Site Plan Approval o Development Plan Approval Building Permits Table 6 Permit Matrix has been prepared for quick references as to what permits are anticipated to be needed for each of the proposed projects prior to proceeding with the projects construction. The District Engineer certifies that all permits and approvals necessary to complete the improvements to be funded by the District have either been obtained or will be obtained and that there is no reason to believe that the necessary permits cannot be obtained for the entire development. Table 7 Future Permit Matrix provides an estimated time table for permit acquisition FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 19

106 Table 6 BAN Permit Matrix FDEP City of Clearwater FDOT Army Corp of Engineers Pinellas County EPA SWFWMD Project Location Infrastructure Category Waste Water Collection and Transmission System Potable Water System Extension, General Permit (by Pinellas County Health) Dredge and Fill Preliminary Site Plan Site Plan Approval Demolition Driveway Connection Drainage Connection Utility Permit Dredge and Fill Water Navigation Authority Permit Habitat Management Permit NPDES Environmental Resource Permit Harbourside Water, Sewer, U/G Utilities 4 Infrastructure for Project 1 (U/G Utilities) 4Q Q Q Q Q Q Q Q Q Q Q Q-2007 Roadway, Lighting, Landscaping Belleair Road Improvements 5 (10' Each Side of Road) 1Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q-2007 Seawall 2 Bulkhead at St. Joe Dock Walkways from Dock around 3 Water Park 4Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q-2007 Recreational Amenities 1 St. Joe Site Dock 4Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q-2007 Commonwealth Shopping Center Water, Sewer, U/G Utilities 6 Build Utilities Under Garage 7 All Other U/G Utilities for Resort 4Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q-2007 Stormwater Management Facilities Storm Drainage System for 12 Resort 4Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q-2007 Roadway, Lighting, Landscaping, Hardscaping Landscaping / Hardscaping / 8 Lakes Entry Road - New Construction (Lighting, Landscaping, & 9 Utilities Perimeter Road - 10 New Construction 4Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q U/G Utilities under Perimeter Roads above 4Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q-2007 Recreational Amenities Existing Shopping 13 Center Demolition 1Q Q Q Q Q Q Q Q Q Q Q Q-2007 Notes: No permits are required for Grand Venezia with regard to BAN Projects. Additional permits may be required for all future projects including but not limited to the water park, gondola pond and associated canal. Dates shown for submittal and approval of permits are anticipated. Actual submittal and approval dates are subject to the development and the agency issuing the permit. 1Q = First Quarter - January, February & March Matrix Cell Legend 2Q = Second Quarter - April, May & June permit submission date 4Q Q = Third Quarter - July, August & September permit approval date 1Q Q = Fourth Quarter - October, November & December FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 20

107 Table 7 Future Permit Matrix Project Number Project Name FDEP City of Clearwater FDOT Army Corp of Engineers Pinellas County EPA SWFWMD Harborside Property Recreational Amenities 1 Water Park Fall Fall Fall Fall Fall Resort Property (Commonwealth Shopping Center) Recreational Amenities 2 Gondola Pond Fall Fall Fall Fall Fall Canal Fall Fall Fall Fall Fall Notes: No permits are required for Grand Venezia with regard to BAN Projects. Additional permits may be required for all future projects including but not limited to the water park, gondola pond and associated canal. Dates shown for submittal and approval of permits are anticipated. Actual submittal and approval dates are subject to the development and the agency issuing the permit 1Q = First Quarter - January, February & March Matrix Cell Legend permit submission date 3Q Q = Second Quarter - April, May & June 3Q = Third Quarter - July, August & September Permit approal date 4Q Q = Fourth Quarter - October, November & December FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 21

108 Permits heretofore obtained for the existing improvements include the following: Harborside o City of Clearwater Site Plan Permit Water Connection Sewer Connection o FDEP Water (PCHD) Domestic Water Extension Sewer Wastewater Extension NPDES Storm Discharge o SWFWMD ERP Grand Venezia o City of Clearwater Water Connection Sewer Connection o FDEP Water (PCHD) Domestic Water Extension Sewer Wastewater Extension NPDES Storm Discharge o SWFWMD ERP General Permit 9.1 Existing Entitlements The Commonwealth Parcel is zoned Commercial District ( C ) on the City of Clearwater Zoning Map. This type of zoning is consistent with the Countywide Future Land Use (FLUM) designation of Commercial General. FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 22

109 The (C) Commercial General land use classification allows for the following: A maximum floor area ratio of FAR.55, An impervious surface ratio of ISR.95, A maximum building height of 50 ft., A maximum 24 dwelling units per acre of land, A maximum of 40 units of overnight accommodations per acre Other allowable land uses are: o Marina facilities o Mixed use o Offices o Overnight accommodations o Restaurants o Retail sales and services o Comprehensive infill redevelopment projects Under the (C) Commercial General Land Use classification and without the use of any variations, the Developer would be capable of constructing 650 overnight accommodations/condominium hotel units on the acres (40 units x ac. = 650). In addition, support facilities such as a hotel restaurant, meeting rooms, health spa, swimming pools, clubhouse/ cabanas, tennis courts, fitness rooms, hotel management and back-ofhouse storage and operation facilities are permitted. Additional units can be obtained through a flexible development plan approved by the city. There are no restrictions on the size of the hotel rooms that could be constructed provided that the maximum floor area ratio, impervious surface ratio, maximum building height and other setback and side yard requirements are not exceeded and the required on-site parking is achieved with structured parking and/or surface parking areas. There is an open drainage ditch along the north property line of the Commonwealth parcel that is likely to be impacted due to the intensity of the development along the north edge of the site. If the Developer and its engineers decide to pipe the drainage ditch, it will require an Army Corp of Engineers (ACOE) permit. In our opinion we expect the piping of the ditch to be permittable by the ACOE and further expect the CDD to be able to proceed with its other infrastructure development projects while the application is pending. The Harborside parcel is within the same zoning district as the Commonwealth parcel. Without a change in zoning or the future land use designation; the BAN Projects and Future Projects within this parcel must FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 23

110 be in conformance with the regulations and guidelines set forth in the Commercial General Land use classification. The BAN Project and Future Projects within the Grand Venezia parcel as described in this report will be considered maintenance and upkeep and not require permitting or approval efforts beyond general construction approvals obtained by the contractor. 10. BENEFIT The improvements described in this report provide benefit to the property in the District in excess of the costs there of. 11. REFERENCES City of Clearwater o Public Works Administration Engineering/GIS Sewer Atlas Water Atlas Storm Atlas Existing Site Plans o Grand Venezia Site Plan Prepared by King Engineering Existing Surveys o Commonwealth Shopping Center Prepared by PBS&J o Harborside Prepared by PBS&J Architectural Renderings o Prepared by Michael Redd Associates Aerial Photograph Onsite observations/visits Meeting Minutes with: FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 24

111 o City of Clearwater City Engineer Mike Quillen o City of Clearwater Traffic Engineer Scott Rice Amended and Restated Engineer s Report for Master Infrastructure, Nov 2005, both text and exhibits. FTL: :3 P:\Projects\312\001\Report\Draft Engineer's Report.doc Page 25

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115

116 Exhibit 5 Legal Descriptions CLEARWATER CAY COMMUNITY DEVELOPMENT DISTRICT

117 A parcel of land in Sections 20 and 29, Township 29 South, Range 16 East, Pinellas County, Florida, being more particularly described as follows: Commence at the Southwest corner of said Section 20; thence along the South line of said Section 20, S89 19'48"E, a distance of feet to the East right of way line of U.S. Highway 19 and the POINT OF BEGINNING; thence N01 26'21"E, along said East right of way line, a distance of feet; thence S89 19'48"E, parallel with said South line of Section 20, a distance of feet to the Southeast corner of property conveyed in Official Records Book 13955, Page 418 of the Public Records of Pinellas County, Florida; thence N01 26'21"E, along the East line of said property, a distance of feet to the Northeast corner of said property; thence N89 19'48"W, along the North line of said property, a distance of feet to said East right of way line of U.S. Highway 19; thence N01 26'21"E, along said East right of way line, a distance of feet to the Southwest corner of property conveyed in Official Records Book 13618, Page 304 of the Public Records of Pinellas County, Florida; thence S89 19'48"E, along the South line of said property, a distance of feet to the Southeast corner of said property; thence N01 26'21"E, along the East line of said property, a distance of feet to the Northeast corner of said property; thence N89 19'48"W, along the North line of said property, a distance of feet to said East right of way line of U.S. Highway 19; thence N01 26'21"E, along said East right of way line, a distance of feet; thence S89 26'50"E, a distance of feet; thence S01 26'21"W, a distance of feet; thence N89 19'48"W, a distance of feet; thence S01 26'21"W, a distance of feet; thence N89 19'48"W, a distance of feet; thence S01 26'21"W, a distance of feet to said South line of Section 20 and the North line of said Section 29; thence S89 19'48"E, along said South line and North line, a distance of feet to Northeast corner of property conveyed in Official Records Book 10769, Page 1415 of the Public Records of Pinellas County, Florida; thence S00 27'22"E, for feet to the Northwest corner of property conveyed in Official Records Book 13805, Page 313 of the Public Records of Pinellas County, Florida, said corner also being a point of intersection with a non-tangent curve concave to the South; thence Easterly along the arc of said curve with a radial bearing S00 27'51"E, and having a radius of feet, a central angle of 14 51'42", an arc length of 9.08 feet and a chord bearing S83 02'00"E, for 9.05 feet to the point of reverse curvature with a curve concave to the North; thence Easterly along the arc of said curve, having a radius of feet, a central angle of 13 43'39", an arc length of 8.39 feet and a chord bearing S82 27'58"E, for 8.37 feet to the point of tangency; thence S89 19'48"E, for feet to the point of intersection with a non-tangent curve concave to the Northwest; thence Easterly along the arc of said curve with a radial bearing N00 40'13"E, and having a radius of feet, a central angle of '08", an arc length of feet and a chord bearing N31 18'08"E, for feet to the point of intersection with a non-tangent curve concave to the Northeast; thence Southeasterly along the arc of said curve with a radial bearing N61 56'04"E, and having a radius of feet, a central angle of 46 10'01", an arc length of feet and a chord bearing S51 08'57"E, for feet to the point of compound curvature with a curve concave to the North; thence Easterly along the arc of said curve, having a radius of feet, a central angle of 56 40'40", an arc length of feet and a chord bearing N77 25'43"E, for feet to the point of reverse curvature with a curve concave to the Southeast; thence Northeasterly along the arc of said curve, having a radius of feet, a central angle of 00 31'45", an arc length of 2.80 feet and a chord bearing N49 21'15"E, for 2.80 feet to the point of intersection with a non-tangent line; thence N40 22'52"W, for feet to the point of intersection with a non-tangent curve concave to the Northwest; thence Northeasterly along the arc of said curve with a radial bearing N40 43'39"W, and having a radius of feet, a central angle of 02 40'04", an arc length of 3.49 feet and a chord bearing N47 56'19"E, for 3.49 feet to the point of reverse curvature with a curve concave to the Southeast; thence Northeasterly along the arc of said curve, having a radius of feet, a central angle of 34 19'10", an arc length of feet and a chord bearing N63 45'52"E, for feet to the point of tangency; thence N80 55'27"E, for feet; thence N56 01'58"E, for feet; thence N78 50'41"E, for feet; thence S78 23'09"E, for feet; thence S11 52'40"E, for 9.10 feet; thence N79 23'05"E, for feet; thence N10 51'19"W, for feet; thence N42 27'28"E, for feet; thence N35 48'02"E, for feet; thence East, for feet; thence S38 08'04"E, for feet; thence East, for feet; thence N54 10'51"E, for feet; thence East, for feet; thence N55 05'18"E, for feet; thence East, for feet to the point of curvature of a curve concave to the North; thence Easterly along the arc of said curve, having a radius of feet, a central angle of 39 42'28", an arc length of feet and a chord bearing N70 08'46"E, for feet to the point of reverse curvature with a curve concave to the South; thence

118 Northeasterly along the arc of said curve, having a radius of feet, a central angle of 36 55'37", an arc length of feet and a chord bearing N68 45'21"E, for feet to the point of reverse curvature with a curve concave to the Northwest; thence Easterly along the arc of said curve, having a radius of feet, a central angle of 87 13'09", an arc length of feet and a chord bearing N43 36'34"E, for feet to the point of tangency; thence North, for feet; thence S89 19'09"E, for feet; thence S60 00'00"W, for feet; thence S89 19'48"E, for feet; thence S24 54'45"W, for feet to the point of intersection with a non-tangent curve concave to the Southeast; thence Southwesterly along the arc of said curve with a radial bearing S52 36'11"E, and having a radius of feet, a central angle of 13 22'27", an arc length of feet and a chord bearing S30 42'35"W, for feet to the point of intersection with a non-tangent line; thence N89 04'26"W, for feet to the Southeast corner of property conveyed in Official Records Book 10769, Page 1415 of the Public Records of Pinellas County, Florida; thence N89 21'00"W, along the South line of said property, a distance of feet to said East right of way line of U.S. Highway 19; thence N00 51'16"E, along said East right of way line, feet to the said POINT OF BEGINNING; LESS AND EXCEPT the following described parcel: A parcel of land lying in the Southwest 1/4 of the Southwest 1/4 of Section 20, Township 29 South, Range 16 East, Pinellas County, Florida, per Official Records Book 9527, Page 480, Public Records of Pinellas County, Florida, being more particularly described as follows: Commence at the Southwest corner of said Section 20 and run South 89 19'48" East, feet to the East right-of-way line of U.S. Highway 19; thence North 01 26'21" East along said East right-of-way line, 5.00 feet to the POINT OF BEGINNING; thence continue North 01 26'21" East, along said East right-ofway line, feet; thence South 89 19'48"" East, feet; thence South 01 26'21"" West, feet; thence North 89 19'48" West, feet to the POINT OF BEGINNING. Overall property containing acres, more or less. Prepared by: PBS&J 482 South Keller Road Orlando, FL September 28,

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