SERVICE PLAN FOR PROSPER PARK & RECREATION FINANCING METROPOLITAN DISTRICT (ARAPAHOE COUNTY, COLORADO)

SERVICE PLAN FOR PROSPER PARK & RECREATION FINANCING METROPOLITAN DISTRICT (ARAPAHOE COUNTY, COLORADO) Submitted: August 11, 2014 Resubmitted: October 17, 2014 Resubmitted: January 23, 2015 Approved:, 2015 PREPARED BY: MCGEADY SISNEROS, P.C. 450 E. 17 th AVENUE, SUITE 400 DENVER, CO 80203-1254 (303) 592-4380 Initials: {00354055.DOC v:3 }

TABLE OF CONTENTS Page I. INTRODUCTION... 1 A. Concurrent Service Plan Submittals... 1 B. General Information... 2 II. DISTRICT BOUNDARIES/MAPS... 3 III. PURPOSE OF THE DISTRICT... 3 A. Generally... 3 B. Proposed Structure... 4 1. Regional WS District... 4 2. WS Financing District... 4 3. PR Financing District... 5 4. Coordinating District... 5 5. District Nos. 1-4... 5 IV. PROPOSED LAND USE/POPULATION PROJECTIONS... 6 V. DESCRIPTION OF PROPOSED SERVICES... 7 A. Types of Improvements... 7 1. Water... 8 2. Sanitation... 8 3. Streets... 9 4. Safety Protection... 9 5. Park and Recreation... 10 6. Transportation... 10 7. Television Relay and Translation... 11 8. Mosquito Control... 11 9. Fire Protection... 11 10. Other Powers... 11 (a) Plan Amendments... 11 (b) Phasing, Deferral... 12 (c) Enterprise... 12 (d) Fees and Charges... 12 (e) Additional Services... 12 (f) Subdistricts... 12 (g) Special Improvement Districts... 12 (h) Security Services... 13 (i) Covenant Enforcement... 13 B. Standards of Construction/Statement of Compatibility... 13 C. Privately Placed Debt Limitation... 13 VI. ASSESSED VALUATION... 14 VII. ESTIMATED COSTS OF FACILITIES... 14 {00354055.DOC v:3 } i

VIII. REGIONAL IMPROVEMENTS / INTERGOVERNMENTAL AGREEMENT... 14 A. Coordinated Services of the Districts... 14 IX. OPERATION AND MAINTENANCE / ESTIMATED COSTS... 15 X. FINANCIAL PLAN/PROPOSED INDEBTEDNESS... 16 A. General Discussion... 16 B. Revenue Bonds... 19 C. General Obligation Bonds... 19 D. Mill Levy... 21 E. Cost Summary and Bond Development... 24 F. Operations... 24 G. Surrounding Area Debt Information... 25 XI. ANNUAL REPORT... 25 XII. CONCLUSION... 26 {00354055.DOC v:3 } ii

SCHEDULE OF EXHIBITS EXHIBIT A EXHIBIT B EXHIBIT C EXHIBIT D EXHIBIT E EXHIBIT F EXHIBIT G EXHIBIT H Legal Description of Property Legal Description of Service Area Boundary Map for Property and Service Area Vicinity Map Depiction of Public Improvements Cost Estimate Financial Plan Surrounding Area Debt Information {00354055.DOC v:3 } iii

SERVICE PLAN FOR PROSPER PARK & RECREATION FINANCING METROPOLITAN DISTRICT I. INTRODUCTION A. Concurrent Service Plan Submittals The owner of 100% of the mixed-use development project known as Prosper (the Proponent ), located in Arapahoe County, Colorado (the County ), is concurrently submitting Service Plans for each of the following proposed metropolitan districts, which are being organized to provide public improvements, facilities and services necessary to develop and serve the Prosper development: 1. Prosper Regional Water & Sanitation Service Metropolitan District (the Regional WS District ); 2. Prosper Water & Sanitation Financing Metropolitan District (the WS Financing District ); 3. Prosper Park & Recreation Financing Metropolitan District (the PR Financing District ); 4. Prosper Coordinating Metropolitan District (the Coordinating District ); 5. Prosper Metropolitan District No. 1 ( District No. 1 ); 6. Prosper Metropolitan District No. 2 ( District No. 2 ); 7. Prosper Metropolitan District No. 3 ( District No. 3 ); and 8. Prosper Metropolitan District No. 4 ( District No. 4 ). 9. As used herein, the term Districts shall mean, collectively, the Regional WS District, the WS Financing District, the PR Financing District, the Coordinating District and District Nos. 1-4, unless the context dictates otherwise. {00354055.DOC v:3 }

The Proponent is requesting that the Service Plans for the Districts be processed and approved concurrently with the zoning application for Prosper Farms now pending before the County Board of County Commissioners. B. General Information Pursuant to the requirements of the Special District Control Act, Section 32-1-201, et seq., Colorado Revised Statutes, this Service Plan consists of a financial analysis and an engineering plan showing how the existing and proposed facilities and services of the proposed Districts will be constructed and financed. The following items are included in this Service Plan: 1. A description of the proposed services; 2. A financial plan showing how the proposed services are to be financed, including the proposed operating revenue derived from property taxes of the WS Financing District, PR Financing District and District Nos. 1-4; 3. A preliminary engineering or architectural survey showing how the proposed services are to be provided; 4. A map of the District boundaries, the proposed Service Area (defined below) and an estimate of the population and valuation for assessment of each of the Districts; 5. A general description of the facilities to be constructed and the standards of such construction, including a statement of how the facility and service standards of the Districts are compatible with facility and service standards of the County and of any municipalities and special districts which are interested parties pursuant to Section 32-1-204(l), Colorado Revised Statutes; {00354055.DOC v:3 } 2

6. A general description of the estimated cost of acquiring land, engineering services, legal services, administrative services, proposed indebtedness and estimated proposed maximum interest rates and discounts, and other major expenses related to the operation of the District; and 7. A description of any arrangement or proposed agreement with any political subdivision for the performance of any services between the District and such other political subdivision. II. DISTRICT BOUNDARIES/MAPS The total area to be initially included in the District is approximately five thousand, one hundred forty-four (5,143.88) acres (the Property ). The total area comprising the District s service area (inclusive of the Property) is approximately five thousand, one hundred forty-four (5,144) acres ( Service Area ). Legal descriptions of the Property and the Service Area are attached hereto as Exhibits A and B, respectively. Maps of the boundaries of the Property and the Service Area are attached hereto as Exhibit C, and a vicinity map is attached hereto as Exhibit D. The District will not include any property outside the boundaries of the Service Area, without obtaining prior consent of the County. III. PURPOSE OF THE DISTRICT A. Generally The Service Area (also referred to herein as the Development ), is generally located south of I-70, west of Imboden Road, east of Hayesmount Road and north of East Jewell Avenue, and is entirely within the boundaries of the County. The Development is now vacant and is not presently served with the facilities and services to be provided by the District. Neither the County nor any other existing special district has plans to provide such services and facilities {00354055.DOC v:3 } 3

within a reasonable time and on a comparable basis. It is proposed that the District have the following powers and/or provide the following improvements or services to the Development: (1) water and sanitation facilities and services; (2) sanitary sewer and storm drainage facilities and services; (3) street improvements (including some maintenance authority); (4) safety protection facilities and services; (5) transportation facilities; (6) mosquito control facilities and services; (7) park and recreation facilities and services; and (8) television relay and translation facilities. The District will dedicate certain of the public improvements to the County or to such other entity as appropriate. B. Proposed Structure Services will be provided to the Development by the Districts as described below. 1. Regional WS District. Because the Development is not presently within the boundaries of any entity that provides water or sanitation services, the Regional WS District will provide ongoing water and/or sanitation services to property within and outside of the Development, either directly or by contract with another provider or providers, and shall be empowered to establish an enterprise for such purposes. The boundaries of the Regional WS District will remain limited to a small parcel, and the Regional WS District will not be authorized to impose its own mill levy for either debt service or operation and maintenance purposes. 2. WS Financing District. The WS Financing District, which will comprise all of the property within the Development, will provide funds to support the financing of water and sanitation improvements and facilities constructed by the Regional WS District which are necessary to serve the Development by levying a debt service mill levy not to exceed 20 mills. {00354055.DOC v:3 } 4

To the extent that the Regional WS District determines to serve property outside the Development, it will do so through extraterritorial service agreements. 3. PR Financing District. Because the Development is not presently within the boundaries of any other entity that provides park and recreation improvements and facilities, the PR Financing District, which will comprise all of the property within the Development, will provide funds to support the financing of park and recreation improvements and facilities constructed by the Coordinating District by levying a debt service mill levy not to exceed 8 mills. 4. Coordinating District. The Coordinating District will coordinate financing, construct, own, maintain and operate all public improvements and facilities throughout the Development, except for the water and sanitation improvements and facilities to be operated and maintained by the Regional WS District, and otherwise provide for coordination among the Districts to provide public services to the Development in the most efficient manner possible. The boundaries of the Coordinating District will remain limited to a small parcel, and the Coordinating District will not be authorized to impose its own mill levy for either debt service or operation and maintenance purposes. 5. District Nos. 1-4. District Nos. 1-4 (collectively, the Financing Districts ) will finance the improvements and facilities constructed by the Coordinating District, other than those financed by the WS Financing District and PR Financing District, by levying a debt service mill levy of not more than 50 mills. The initial boundaries of each of District Nos. 1-4 have been drawn to accommodate different land uses and phased development over time. In this manner, the Districts will be responsible for cooperatively constructing and financing public facilities and improvements within and without the Development, and for {00354055.DOC v:3 } 5

providing funding to support costs related to the provision of necessary services and operation and maintenance of certain improvements. The Districts shall enter into one or more Facilities Funding, Construction and Operation Agreements (referred to herein as the FFCOA ), which shall govern the relationships between and among the Districts with respect to the financing, construction, operations and maintenance of the improvements contemplated herein. The FFCOA will establish a mechanism whereby any one or more of the Districts may separately or cooperatively fund, construct and install the Improvements. Except as limited herein, all Districts shall have the same powers to enable them to coordinate the efficient delivery of services necessary to serve the Development through the FFCOA. The terms of the FFCOA shall comply with those provisions of Section 32-1-107, C.R.S., regarding overlapping special districts to ensure that the financing and operation of improvements, facilities and services is not duplicative, but rather are coordinated in an efficient and cost-effective manner. This multiple district structure is proposed because it provides several benefits to the inhabitants of the Development and the County. Multiple districts will assure that: (1) the necessary services and improvements can be financed in the most favorable and efficient manner; (2) all the services and improvements needed for the Development will be available when needed through managed development; and (3) a reasonable mill levy and reasonable tax burden on all residential and commercial property within the Districts will be maintained through managed financing and coordinated completion of infrastructure improvements. IV. PROPOSED LAND USE/POPULATION PROJECTIONS The property within the District is presently vacant. At build-out, it is anticipated that the District together with the other Districts will provide services for the development of approximately 8,000,000 square feet of commercial development, and approximately 9,000 {00354055.DOC v:3 } 6

residential units. Prosper is estimated to include 1,500 low density residential units, 5,100 medium density residential units and 1,100 high density residential units. It is estimated that 1,300 units will be constructed in the Mixed Use-1 and Mixed Use-2 land use districts. The peak day time population for the property within the Districts is estimated at 23,760 persons, based upon the residential ratios set forth in Section 2-111.04 of the Arapahoe County Land Development Code and a ratio of 1 person per 300 square feet of commercial development. It is anticipated that the District s boundaries may change from time to time as it undergoes inclusions and exclusions pursuant to parts 4 and 5 of Article 1, Title 32, C.R.S.; provided, however, that no property shall be subject to debt service mill levies which would exceed the Mill Levy Caps (defined below). The District shall establish a policy for inclusion and exclusion of property from the District s boundaries, which policy shall provide objective procedures for the determination of costs, standards and criteria to allow for the orderly extension of services to developable lands. The District shall not include property that would increase its boundaries by more than 1,000 acres outside the boundaries of the Service Area without the prior written consent of the County. V. DESCRIPTION OF PROPOSED SERVICES The following paragraphs provide a description of the proposed services to be provided by the District. A. Types of Improvements The District shall have the power to provide for the design, acquisition, construction, installation, maintenance, and financing of certain water, sanitation, storm drainage, street, safety protection, park and recreation, transportation, television relay and translation, and mosquito control improvements and services within and without the boundaries {00354055.DOC v:3 } 7

of the District ( Improvements ). This Service Plan describes those Improvements anticipated for construction, financing and operation within the Development. The Improvements generally depicted and described in Exhibit E attached hereto have been presented for illustration only, and the exact design, subphasing of construction and location of the Improvements will be determined at the time of platting and such decisions shall not be considered to be a material modification of the Service Plan. 1. Water. The District shall have the power to provide for the planning, design, acquisition, construction, completion, installation, financing, operation and maintenance of complete potable and non-potable water supply systems, purification, storage, transmission and distribution systems, which may include, but shall not be limited to, water rights, water supply, reservoirs, wells, water pumps, filtration and treatment facilities, power plants, pump stations, ventilating, gauging stations, transmission lines, gathering lines, distribution mains and laterals, fire hydrants, meters, irrigation facilities, storage facilities, inlets, tunnels, flumes, conduits, canals, collection, infiltration galleries, dry year water conveyance, facilities, support for irrigated agricultural uses, domestic water, land and easements, and all necessary, incidental, and appurtenant facilities, together with extensions of and improvements to said system, within and without the boundaries of the District. It is intended that the Regional WS District will provide ongoing operation, maintenance and repairs of such water systems, unless such systems are conveyed to and accepted by another appropriate jurisdiction. 2. Sanitation. The District shall have the power to provide for the planning, design, acquisition, construction, completion, installation, financing, operation and maintenance of complete sanitary sewage collection, treatment, transmission and disposal systems which may include, but shall not be limited to, treatment plants, inlets, collection mains and laterals, {00354055.DOC v:3 } 8

intercepting sewers, outfall sewers, lift stations, transmission lines, force mains, sludge handling and disposal facilities, closed drainage systems, and/or storm sewer, flood and surface drainage facilities and systems, including but not limited to, detention/retention ponds and associated irrigation facilities, and all necessary, incidental and appurtenant facilities, land and easements, together with extensions of and improvements to said system within and without the boundaries of the District. It is intended that the Regional WS District will provide ongoing operation, maintenance and repairs of such sanitation and storm drainage facilities, unless such facilities are conveyed to and accepted by another appropriate jurisdiction. 3. Streets. The District shall have the power to provide for the acquisition, construction, completion, installation and/or operation and maintenance of street improvements, including curbs, gutters, culverts, and other drainage facilities, sidewalks, bike paths and pedestrian ways, including pedestrian bridges and underpasses, bridges, overpasses, interchanges, median islands, paving, lighting, grading, landscaping and irrigation, together with all necessary, incidental, and appurtenant facilities, land and easements, together with extensions of and improvements to said facilities within and without the boundaries of the District. It is anticipated that, following acceptance by the County, the County will own, operate and maintain the streets constructed by any of the Districts. The District may supplement the County s maintenance of the streets as it deems necessary or desirable to benefit its service users. It is anticipated that certain collector/arterial streetscaping and center median island improvements will be maintained by the Coordinating District, an association(s) of land owners within the Development (an Owners Association ) or the County. 4. Safety Protection. The District shall have the power to provide for the acquisition, construction, completion, installation and/or operation and maintenance of facilities {00354055.DOC v:3 } 9

and/or services for a system of traffic and safety controls and devices on streets and highways, including signalization and street lights, signing and striping, together with all necessary, incidental, and appurtenant facilities, land and easements, together with extensions of and improvements to said facilities within and without the boundaries of the District. Following acceptance, all safety protection improvements will be transferred to the County for ownership and maintenance. 5. Park and Recreation. The District shall have the power to provide for the design, acquisition, construction, completion, installation, operation and maintenance of parks and recreational facilities and programs including, but not limited to, parks, bike paths and pedestrian ways, open space, landscaping, cultural activities, community recreational centers and buildings, water bodies, irrigation facilities, and other active and passive recreational facilities and programs, and all necessary, incidental and appurtenant facilities, land and easements, together with extensions of and improvements to said facilities within and without the boundaries of the District. Some or all such parks and recreational facilities and landscaping will be owned and maintained by the Coordinating District and/or an Owners Association. 6. Transportation. The District shall have the power to provide for the design, acquisition, construction, completion, installation, operation and maintenance of a system to transport the public by bus, rail, or any other means of conveyance, or combination thereof, or pursuant to contract, including park and ride facilities and parking lots, structures, and facilities, together with all necessary, incidental and appurtenant facilities, land and easements, and all necessary extensions of and improvements to said facilities of systems within and without the boundaries of the District. Following acceptance, it is anticipated that the transportation improvements will be owned, operated and maintained by the County or other appropriate {00354055.DOC v:3 } 10

jurisdiction. By including within its authority the ability to construct transportation improvements, it is not the intention of the District to supplant RTD s role as a provider of such improvements or related services. 7. Television Relay and Translation. The District shall have the power to provide for the design, acquisition, construction, completion, installation, operation and maintenance of television relay and translation facilities and programs, together with all necessary, incidental and appurtenant facilities, land and easements, and all necessary extensions of and improvements to said facilities or programs within and without the boundaries of the District. Following acceptance, the television relay and translation improvements will be owned, operated and maintained by the Coordinating District or other appropriate jurisdictions. 8. Mosquito Control. The District shall have the power to provide for the eradication and control of mosquitoes, including but not limited to elimination or treatment of breeding grounds, and purchase, lease, contracting or other use of equipment or supplies for mosquito control. 9. Fire Protection. The District shall have the power to provide fire protection services in accordance with applicable state law. It is anticipated that the District will enter into one or more agreements with the Bennett Fire Protection District regarding fire protection and emergency response services. 10. Other Powers. In addition to the enumerated powers, the Board of Directors of the District ( Board ) shall also have the following authority: (a) Plan Amendments. To amend the Service Plan as needed in conjunction with the County and subject to the appropriate statutory procedures. {00354055.DOC v:3 } 11

(b) Phasing, Deferral. Without amending this Service Plan, to defer, forego, reschedule, or restructure the financing and construction of certain improvements and facilities, to better accommodate the pace of growth, resource availability, and potential inclusions and exclusions of property within the District. (c) Enterprise. With respect to the Regional WS District, to establish one or more enterprises using the procedures and criteria provided by Article X, Section 20, of the Colorado Constitution, to provide water and/or sanitation services to property within and without the Development, either directly or pursuant to agreement(s) with other provider(s). (d) Fees and Charges. To impose and collect fees, rates, tolls, penalties or charges as a source of revenue for repayment of debt, capital costs and/or for operation and maintenance expenses. Such authority shall include the right to collect and receive public improvement fees. (e) Additional Services. Except as specifically provided herein, to provide such additional services and exercise such powers as are expressly or impliedly granted by Colorado law. (f) Subdistricts. Pursuant to Section 32-1-1101(1)(f)(I), C.R.S. and Section 32-1-1101(1.5)(a) through (1.5)(e), C.R.S., to divide the District into one or more areas consistent with the services, programs and facilities to be furnished therein. The exercise of such authority shall not be deemed a material modification of this Service Plan. (g) Special Improvement Districts. Pursuant to Section 32-1-1101.7, C.R.S., to establish one or more special improvement district(s) to finance all or a part of the costs of any Improvements that the Districts are authorized to finance, including the power to levy assessments. {00354055.DOC v:3 } 12

(h) Security Services. Pursuant to Section 32-1-1004(7), C.R.S., to furnish security services. (i) Covenant Enforcement. Pursuant to Section 32-1-1004(8), C.R.S., to furnish covenant enforcement and design review services. B. Standards of Construction/Statement of Compatibility. All public improvements will be designed, constructed, inspected and maintained in accordance with: 1. Development plans approved by the County; and 2. All applicable County standards, rules and regulations, as well as applicable laws, rules and regulations of local, state and federal governments. C. Privately Placed Debt Limitation. Prior to the issuance of any privately placed debt, the District shall obtain the certification of an External Financial Advisor substantially as follows: We are [I am] an External Financial Advisor within the meaning of the District s Service Plan. We [I] certify that (1) the net effective interest rate (calculated as defined in Section 32-1-103(12), C.R.S.) to be borne by [insert the designation of the Debt] does not exceed a reasonable current [tax-exempt] [taxable] interest rate, using criteria deemed appropriate by us [me] and based upon our [my] analysis of comparable high yield securities; and (2) the structure of [insert designation of the debt], including maturities and early redemption provisions, is reasonable considering the financial circumstances of the District. The External Financial Advisor shall be a consultant that: (i) advises Colorado governmental entities on matters relating to the issuance of securities by Colorado governmental entities, including matters such as the pricing, sales and marketing of such securities and the procuring of bond ratings, credit enhancement and insurance in respect of such securities; (ii) shall be an underwriter, investment banker, or individual listed as a public finance advisor in the Bond Buyer s Municipal Market Place; and (iii) is not an officer or employee of the District and {00354055.DOC v:3 } 13

has not been otherwise engaged to provide services in connection with the transaction related to the applicable debt. If the District has engaged a municipal advisor that meets the foregoing criteria and has a fiduciary duty to the District, the municipal advisor may fill the role of the External Financial Advisor. VI. ASSESSED VALUATION For purposes of this Service Plan, the assessed valuation of the Property within the District s boundaries is assumed to be $-0-. The projected build-out for the Development is set forth in the Financial Plan attached hereto as Exhibit G. At build-out, the assessed valuation of the Development is expected to be Five Hundred Eighteen Million, Two Hundred Twenty-Four Thousand, Six Hundred Fifty-Eight Dollars ($518,224,658) under the Financial Plan. VII. ESTIMATED COSTS OF FACILITIES The estimated costs of the Improvements to be designed, constructed, and installed to serve the Development are approximately as set forth in Exhibit F attached hereto. A general description and preliminary engineering sketch of the facilities to be constructed and/or acquired are set forth in Exhibit E attached hereto. Subject to the debt limitations provided for in Section X, the District will be authorized to fund any combination of the Improvements. VIII. REGIONAL IMPROVEMENTS / INTERGOVERNMENTAL AGREEMENT A. Coordinated Services of the Districts As discussed throughout this Service Plan, the relationships among the Districts will be established through the FFCOA. The FFCOA shall govern the relationships between and among the Districts with respect to the financing, construction and operation of the Improvements contemplated herein. The FFCOA will establish a mechanism whereby any one or more of the Districts may separately or cooperatively fund, construct and install the {00354055.DOC v:3 } 14

Improvements. The FFCOA will also establish the procedures and standards for the approval of the design, operation and maintenance of the Improvements. Additionally, the FFCOA will provide the procedures for coordinated financing, budgeting and administrative oversight and management. IX. OPERATION AND MAINTENANCE / ESTIMATED COSTS Subject to the applicable warranty, the District intends to dedicate certain facilities constructed or acquired, to the appropriate jurisdiction for operations and maintenance. Certain water and sewer improvements may be owned, operated and/or maintained by the Regional WS District subject to the receipt of funding from the WS Financing District pursuant to the FFCOA and enterprise revenues as more specifically set forth below. Estimated costs for operation and maintenance functions are shown on the Financial Plan. It is anticipated that the Financing Districts will initially impose an operation and maintenance mill levy to cover the operating costs of the Districts. The District shall be authorized to impose a system of fees, rates, tolls, penalties or charges in connection with its provision of services, including service fees and charges for water and sanitation services. The Mill Levy Caps (defined below) do not apply to each District s ability to increase its mill levy as necessary for provision of operation and maintenance services to the Property and Service Area. However, there are statutory and constitutional limits on each District s ability to increase its mill levies for operation and maintenance services without an election. The Financial Plan assumes the District will incur initial operation, maintenance and administrative expenses, such as those related to legal, accounting and District management functions of the District, in the amount of Fifty Thousand Dollars ($50,000). {00354055.DOC v:3 } 15

Prior to the District having sufficient revenue to cover its ongoing operations and maintenance expenses, the developer of property within the Development (the Developer ) will advance funds to the District. The District will have the authority to repay the Developer for amounts advanced for operations and maintenance expenses, together with interest thereon. In addition to the sources of revenue described above, the Board of Directors ( Board ) of the Regional WS District may set up enterprises to manage and operate such facilities, services and programs as may qualify for enterprise status using the procedures and criteria provided by Article X, Section 20, of the Colorado Constitution. To the extent provided by law, any enterprise created by the Regional WS District shall remain under the control of such Board. The operation and maintenance of the water and sewer facilities will be funded by the revenue derived from service fees to be established by the enterprise(s) pursuant to a rate study. X. FINANCIAL PLAN/PROPOSED INDEBTEDNESS A. General Discussion The District shall be authorized to issue general obligation and/or revenue bonds to finance the cost of the Improvements. Such bonds will be secured by the pledge of revenues which include, but are not limited to, ad valorem tax revenues, facilities fees, public improvement fees, and water and sewer tap fees and service charges received directly by the District or pledged to the District by one or more of the other Districts, which may issue bonds and pledge the proceeds therefrom to the District for payment of District bonds. The maximum amount of debt the Districts, in the aggregate, shall be authorized to issue is One Billion Six Hundred Million Dollars ($1,600,000,000) (the Maximum Debt Amount ), comprising the following, which shall serve as the Maximum Debt Amount authorized to each of the respective Districts: {00354055.DOC v:3 } 16

1. The maximum amount of debt the Regional WS District may issue for construction of water and sanitation Improvements payable from the debt service mill levy of the WS Financing District shall be Five Hundred Ninety-Nine Million Six Hundred Eighty Thousand Dollars ($599,680,000); and 2. The maximum amount of debt the Coordinating District may issue for construction of park and recreation Improvements payable from the debt service mill levy of the PR Financing District shall be Forty Million Eight Hundred Thousand Dollars ($40,800,000); 3. The maximum amount of debt the Coordinating District may issue for construction of Improvements (excluding water and sanitation improvements and park and recreation improvements) payable from the debt service mill levy of the Financing Districts in the aggregate shall be Nine Hundred Fifty-Nine Million Five Hundred Twenty Thousand Dollars ($959,520,000). This Service Plan contains a Financial Plan set forth in Exhibit G that assumes development in accordance with zoning ( Financial Plan ). The Financial Plan shows how the proposed facilities and/or services to serve the Development are to be financed including the estimated costs of engineering services, legal services, administrative services, proposed bond issuances and estimated proposed maximum interest rates and discounts, and other major expenses related to the organization and operation of the Districts. It demonstrates the issuance of bonds and the anticipated repayment based on the projected development within the Development. The Financial Plan demonstrates that, at various projected levels of development, the District has the ability to finance the Improvements and will be capable of discharging the debt on a reasonable basis. The Financial Plan anticipates that facilities fees to be imposed by the Financing Districts at the rate of One Thousand Dollars ($1,000) per unit for high-density {00354055.DOC v:3 } 17

and mixed-use residential development and Two Thousand Dollars ($2,000) per unit for medium-density and low-density residential development, and tap fees of Fifteen Thousand Dollars ($15,000) per residential tap and Twenty-Five Thousand Dollars ($25,000) per commercial tap; however, such fees may be increased or decreased as deemed necessary by the Districts to accommodate the financing, construction and installation of the Improvements. In order to finance the Improvements, the Financial Plan demonstrates the issuance of debt in the total amount of Six Hundred Seventy-Six Million Two Hundred Fifty Thousand Dollars ($676,250,000). The Financial Plan shows that prior to the time of the initial issuance of bonds by the District(s), the construction costs for necessary Improvements will be paid by the Developer, subject to subsequent acquisition by the District of the completed improvements and payment to the Developer of such construction costs together with accrued interest thereon. Not less than fourteen (14) days prior to the date of issuance of any general obligation bonds or revenue bonds (excluding refunding bonds), the issuing District shall provide the County Planning Division with notice of the District s intent to issue bonds together with the District s plan of finance for the issuance of the bonds and a report, or an updated report if one was previously issued, from a third party market research firm or a market research analyst that has been engaged in analyzing residential and commercial market conditions for at least five (5) years (the Market Analyst ), that it has reviewed the financial projections utilized in sizing the proposed bond issuance and the District s ability to meet the debt service requirements of such bonds including, but not limited to, absorption rates, valuation, growth and inflation rates and has evaluated the same in comparison to current and projected market conditions for Arapahoe County and/or such other areas deemed by such Market Analyst to be comparable, and that such {00354055.DOC v:3 } 18

financial projections are reasonable. Additionally, on the date of closing for the bonds, the issuing District shall deliver to the County Planning Division an opinion of counsel that the bonds are being issued in compliance with the applicable provisions of the District s Service Plan. B. Revenue Bonds The Districts will seek authority from its electorate to incur revenue debt for various purposes in an aggregate amount not to exceed the Maximum Debt Amount and subject to the same limitations set forth in Section X.A above with respect to the maximum amount of debt that may be issued by each of the Districts. The Regional WS District may issue bonds payable from fees, rates, tolls or charges, or payable from pledged ad valorem tax revenues from the WS Financing District. The Coordinating District may issue bonds payable from fees, rates, tolls or charges, or payable from pledged ad valorem tax revenues from the PR Financing District and Financing Districts. Any such revenue bonds will be issued in strict compliance with any then existing statutory or regulatory provisions. The amount of voter authorization to be sought exceeds the total debt set forth in the Financing Plan. This will allow for unforeseen contingencies and increases in construction costs due to inflation, expansions of the Financing District s boundaries, and to cover all issuance costs, including capitalized interest, reserve funds, discounts, legal fees and other incidental costs of issuance. C. General Obligation Bonds Each will seek authority from its electorate to incur general obligation debt for various purposes in an amount not to exceed the following: {00354055.DOC v:3 } 19

1. Regional WS District - Five Hundred Ninety-Nine Million Six Hundred Eighty Thousand Dollars ($599,680,000); 2. WS Financing District - Five Hundred Ninety-Nine Million Six Hundred Eighty Thousand Dollars ($599,680,000); 3. PR Financing District - Forty Million Eight Hundred Thousand Dollars ($40,800,000); 4. Coordinating District - One Billion Three Hundred Twenty Thousand Dollars ($1,000,320,000); 5. District No. 1 - Nine Hundred Fifty-Nine Million Five Hundred Twenty Thousand Dollars ($959,520,000); 6. District No. 2 - Nine Hundred Fifty-Nine Million Five Hundred Twenty Thousand Dollars ($959,520,000); 7. District No. 3 - Nine Hundred Fifty-Nine Million Five Hundred Twenty Thousand Dollars ($959,520,000); and 8. District No. 4 - Nine Hundred Fifty-Nine Million Five Hundred Twenty Thousand Dollars ($959,520,000). The amount of voter authority to be sought exceeds the total debt set forth in the Financial Plan. This allows for the utilization of alternative financing mechanisms, unforeseen contingencies, increases in construction costs due to inflation, expansions of the Financing Districts boundaries, and to cover all issuance costs, including capitalized interest, reserve funds, discounts, legal fees and other incidents of costs of issuance. The maximum voted interest rate is anticipated to be eighteen percent (18%) per annum, and the maximum underwriting discount is anticipated to be five percent (5%). The {00354055.DOC v:3 } 20

exact interest rates and discounts will be determined at the time the bonds are sold by the District, and will reflect market conditions at the time of sale. The District may also issue notes, certificates, debentures or other evidences of indebtedness, including but not limited to contracts that extend beyond one year. Refunding bonds may be issued as determined by the Board of Directors and shall not count against the Maximum Debt Amount. D. Mill Levy It is anticipated that mill levies on taxable property within the WS Financing District, the PR Financing District and the Financing Districts will be the primary source of revenue for repayment of debt service and operations and maintenance of the Districts. Although the mill levies may vary depending on each Board s decision to fund the projects contemplated in this Service Plan, it is estimated that mill levies in the aggregate of 80.0 mills on residential property within the Development and 62.5 mills on non-residential property within the Development will produce revenue sufficient, together with other funds available, to support the Districts operations and maintenance and debt service through the bond repayment period. The estimated aggregate overlapping mill levies of the Districts are comparable to the aggregate mill levies for other projects in the same market area which are subject to mill levies of a metropolitan district, a park and recreation district and a water and sanitation district as shown on Exhibit H attached hereto. These revenue sources, along with interest income, the facilities fee and, with respect to the Regional WS District, tap fees, should be sufficient to retire the proposed indebtedness if growth occurs as projected; otherwise, increases in the mill levy (in accordance with the provisions of this Section) and/or the imposition of rates, tolls, fees and charges may be necessary. {00354055.DOC v:3 } 21

The Mill Levy Cap shall be the maximum mill levy a District is permitted to promise to impose for payment of general obligation bonds, and shall be determined as follows: 1. For general obligation bonds which exceed 50% of the District s assessed valuation, the Mill Levy Cap shall be (a) for the WS Financing District, twenty (20) mills, (b) for the PR Financing District, eight (8) mills and (c) for each Financing District, fifty (50) mills; reduced by the number of mills necessary to pay such District s respective unlimited mill levy general obligation debt; provided, however, that in the event the method of calculating assessed valuation is changed after the date of approval of this Service Plan, by any change in law, change in method of calculation, or in the event of any legislation or constitutionally mandated tax credit, cut or abatement, the mill levy limitation applicable to such debt may be increased or decreased to reflect such changes, such increases or decreases to be determined by the Board in good faith (such determination to be binding and final) so that to the extent possible, the actual tax revenues generated by the mill levy, as adjusted, are neither diminished nor enhanced as a result of such changes. For purposes of the foregoing, a change in the ratio of actual valuation to assessed valuation shall be deemed to be a change in the method of calculating assessed valuation. 2. For general obligation bonds which are less than 50% of the District s assessed valuation, either on the date of issuance or at any time thereafter, the Mill Levy Cap for such District shall be such amount as may be necessary to pay the debt service on such general obligation bonds, without limitation of rate. For purposes of the foregoing, once general obligation bonds have been determined to be within D.2. above so that the District is entitled to pledge to its payment an unlimited ad valorem mill levy, the District may provide that such general obligation bonds shall {00354055.DOC v:3 } 22

remain secured by such unlimited mill levy, notwithstanding any subsequent reduction in the assessed valuation of the District. To the extent that the Districts are composed of or subsequently organized into one or more subdistricts as permitted under Section 32-1-1101, C.R.S., the term District as used herein shall be deemed to refer to the District and to each such subdistrict separately, so that each of the subdistricts shall be treated as a separate, independent district for purposes of the application of this definition. All issuances of general obligation bonds and revenue bonds shall be deemed to be in compliance with the Financial Plan so long as the Minimum Criteria, as hereinafter defined, have been met. Minimum Criteria shall mean: (1) the Market Analysis required herein has been delivered to the County; (2) any pledge of mill levy revenue is subject to the applicable Mill Levy Cap to the extent required by this Service Plan; (3) issuance of such bonds will not exceed the applicable Maximum Debt Amount set forth in this Service Plan, as may be amended from time to time; and (4) issuance of such bonds will not exceed the debt authority approved by the District s electorate. For clarity, the following table summarizes the Maximum Debt Amount and the Mill Levy Cap for debt service of each District: District District Maximum Debt Amount* Mill Levy Cap** Regional WS District $599,680,000 0.0 WS Financing District $599,680,000 20.0 PR Financing District $40,680,000 8.0 Coordinating District $1,000,320,000 0.0 District No. 1 $959,520,000 50.0 District No. 2 $959,520,000 50.0 District No. 3 $959,520,000 50.0 District No. 4 $959,520,000 50.0 * Aggregate Maximum Debt Amount = $1,600,000,000. {00354055.DOC v:3 } 23

** No portion of property within the Development shall be subject to an aggregate overlapping District debt service mill levies in excess of 78 mills, so long as the ratio of debt to assessed valuation of property in the applicable District is 50% or less. E. Cost Summary and Bond Development The Financial Plan reflects the total amount of bonds anticipated to be sold to finance the completion, construction, acquisition and/or installation of the proposed Improvements, including all costs and expenses related to the anticipated bond issuances. The actual amount of bonds sold will be based upon the final engineering estimates and/or actual construction contracts. Organizational costs, including legal fees, and capitalized engineering costs, are to be paid from the proceeds of each bond issue. The interest rates as set forth in the Financial Plan are based upon the advice of George K. Baum & Co. The Financial Plan projects the anticipated flow of funds and is based upon estimates of construction and project needs for bond proceeds to finance the proposed Improvements. The District s engineer has evaluated the timing and cost estimate of the proposed Improvements which are necessary to support the proposed absorptions of development as projected in the Financial Plan and has concurred with the assumptions. The Financial Plan sets forth the most reasonable estimate of growth within the Development and allows the Board of Directors a measure of flexibility such that the proposed District need not incur debt in excess of what it needs to meet a growing population s demands for facilities and services. F. Operations Annual administrative, operational and maintenance expenses are estimated as shown in the Financial Plan. The Financial Plan projects that the District will have sufficient revenue to pay for its ongoing operations and maintenance expenses. If necessary, however, the {00354055.DOC v:3 } 24

District reserves the right to supplement these revenues with additional revenue sources as permitted by law. The County shall not be held liable for any of the District s obligations as set forth in this Service Plan. G. Surrounding Area Debt Information Information on the proposed mill levy for the District and for surrounding areas is set forth on Exhibit H attached hereto. XI. ANNUAL REPORT The District shall submit an annual report to the County no later than October 1 of each year following the year in which the Order and Decree creating the District has been issued. The annual report shall include the following information: A. Changes to the District s boundaries as of December 31 of the prior year; B. Intergovernmental agreements entered into by the District during the prior year; C. Rules and regulations, if any, as of December 31 of the prior year; D. Notice of any pending litigation involving the District; E. Status of the District s construction of public improvements as of December 31 of the prior year; F. Assessed valuation of the District for the current year; G. Current year budget; H. Audited financial statements for the prior year, if required by statute, or audit exemption for such year; and I. Notice of any uncured default under any bond documents. {00354055.DOC v:3 } 25

XII. CONCLUSION It is submitted that this Service Plan for the Prosper Park & Recreation Financing Metropolitan District establishes that: A. There is sufficient existing and projected need for organized service in the area to be serviced by the District; B. The existing service in the area to be served by the District is inadequate for present and projected needs; C. The District is capable of providing economical and sufficient service to the area within its proposed boundaries; D. The area to be included in the District does have, and will have, the financial ability to discharge the proposed indebtedness on a reasonable basis; E. Adequate service is not, and will not be, available to the area through the County or other existing municipal or quasi-municipal corporations, including existing special districts, within a reasonable time and on a comparable basis; F. The facility and service standards of the District are compatible with the facility and service standards of the County within which the special district is to be located and each municipality which is an interested party under Section 32-1-204(l), Colorado Revised Statutes; G. The proposal is in substantial compliance with a master plan adopted pursuant to Section 30-28-106, C.R.S.; H. The proposal is in compliance with any duly adopted County, regional, or state long-range water quality management plan for the area; and I. The creation of the District is in the best interests of the area proposed to be served. {00354055.DOC v:3 } 26

EXHIBIT A Legal Description of Property {00354055.DOC v:3 }

EXHIBIT B Legal Description of Service Area {00354055.DOC v:3 }

EXHIBIT C Boundary Map for Property and Service Area {00354055.DOC v:3 }

INTERSTATE INTERSTATE PROSPER T4S R64W & T4S R65W OF THE 6TH PM. ARAPAHOE COUNTY, COLORADO DISTRICT PLAN PROSPER PARK & RECREATION FINANCING METROPOLITAN DISTRICT R65W R64W Railroad 4 3 70 2 US 36 1 WATKINS 6 THUNDER RANCHES 70 5 WATKINS FARM ADAMS COUNTY ARAPAHOE COUNTY Quail Run Rd. 4 T3S T4S 9 SKY RANCH E. 6th Ave. (CR 6) FUTURE 10 S. Hayesmount Rd. (CR 89) DIRT ROAD 11 12 7 Imboden Rd. (CR 101) PAVED ROAD E. 6th Ave. (CR 6) PAVED ROAD 8 9 PROSPER PARK & 16 RECREATION FINANCING 15 METROPOLITAN DISTRICT 14 13 18 17 16 FRITZLERS SUBDIVISION 21 E.Mississippi Ave. (E. CR 14) FUTURE 22 23 S. Hudson Rd. (CR 93) FUTURE 24 GOLDEN GUN CLUB S.Watkins Rd. (CR 97) PAVED ROAD 19 20 21 LEGEND PROSPER SERVICE AREA PROSPER PARK & RECREATION FINANCING METROPOLITAN DISTRICT 475 W. 12th Avenue - Suite E Denver, Colorado 80204-3688 (303) 893-4288 Scale in Feet 0 5000 Scale: 1"=5000' Date: AUGUST 7, 2014 Revision Date:

EXHIBIT D Vicinity Map {00354055.DOC v:3 }

EXHIBIT E Depiction of Public Improvements {00354055.DOC v:3 }