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Res 14-45 Approving the Preliminary Official Statement for Entrada Development PIDA RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE-, TEXAS, APPROVING THE FORM AND AUTHORIZING THE DISTRIBUTION OF A PRELIMINARY OFFICIAL SPECIALREVENUE BONDS, SERI(SOLANA PUBLIC IMPROVEMENT DISTRICT)" WHEREAS, this Town Council (the "Council") of the Town of Westlake, Texas (the "Town") has adopted a resolution authorizing the creation of the Solana Public Improvement District (the "District"); and WHEREAS, this Council intends to issue "Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)" (the "Bonds"), to fund public improvements within the District; and WHEREAS, there has been presented to this Council a Preliminary Official Statement relating to the Bonds (the "Preliminary Official Statement"); and WHEREAS, this Council finds and determines that it is necessary and in the best interests of the Town to approve the form and content of the Preliminary Official Statement and authorize the use of the Preliminary Official Statement in the offering and sale of the Bonds by the Underwriter of the Bonds, Jefferies, LLC; and WHEREAS, the Council finds that the passage of this Resolution is in the best interest of the citizens of the Town. NOW, RESOLVED OOF THE TOWN OF SECTION l: That all matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2: That this Council hereby approves the form and content of the Preliminary Official Statement and deems the Preliminary Official Statement final, except for the omission of such information which is dependent upon the final pricing of the Bonds for completion, all as permitted to be excluded by Section (b)(1) of Rule 15c2-12 under the Securities Exchange Act of 1934, with such changes, addenda, supplements or amendments as may be approved by the Town Manager. The Town hereby authorizes the Preliminary Official Statement to be used by the Underwriter in connection with the marketing and sale of the Bonds. SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions Resolution 14-45 Page i of 2 hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. SECTION 4: That this Resolution shall become effective from and after its date of passage. ATTEST: Kell k Edw4ds)'T—own Secretary FJA 9 9 11101TJ 91 0-YJAVI. FLU KOVIRU�� Laural. Wheat, Mayor Thomas E. Bryme�r�(� n Ma ager Resolution 14-45 Page 2 of 2 ° U 0 0 NEW ISSUE NOT RATED PRELIMINARY OFFICIAL STATEMENT DATED DECEMBER 22, 2014 In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under statutes, regulations, published rulings and court decisions existing on the date thereof, subject to the matters described under "TAX MATTERS" herein, including the alternative minimum tax on corporations. $26,175,000* TOWN OF WESTLAKE, TEXAS, (a municipal corporation of the State of Texas located in Denton and Tarrant Counties) SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) Dated: Date of Delivery Due: September 1, as shown on the inside cover The Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) (the `Bonds"), are being issued by the Town of Westlake, Texas (the "Town"). The Bonds will be issued in fully registered form, without coupons, in authorized denominations of $25,000 of principal amount and any integral multiple of $5,000 in excess thereof. The Bonds will bear interest at the rates set forth on the inside cover, calculated on the basis of a 360 -day year of twelve 30 -day months, and will be payable on each March 1 and September 1, commencing September 1, 2015, until maturity or earlier redemption. The Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York. No physical delivery of the Bonds will be made to the beneficial owners thereof. For so long as the book -entry only system is maintained, the principal of and interest on the Bonds will be paid from the sources described herein by U.S. Bank National Association, as trustee (the "Trustee"), to Cede & Co. as the registered owner thereof, which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "APPENDIX H — BOOK -ENTRY ONLY SYSTEM." The Bonds are being issued by the Town pursuant to the Public Improvement District Assessment Act, Subchapter A of Chapter 372, Texas Local Government Code, as amended (the "PID Act"), an ordinance adopted by the Town Council of the Town (the "Town Council") on January 15, 2015, and an Indenture of Trust, dated as of February 1, 2015 (the "Indenture"), entered into by and between the Town and the Trustee. Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Indenture. Proceeds of the Bonds will be used to provide funds for (i) the payment of a portion of the costs of construction, acquisition and purchase of certain roadway, water, wastewater, drainage, landscape and public park improvements (the "Improvement Project A Improvements") within Improvement Area #1, Improvement Area #2 and Improvement Area #3 (each as described herein) that benefit the entire Solana Public Improvement District, a public improvement district of the Town (the "District"), (ii) the funding of the Reserve Fund in the amount of the Reserve Fund Requirement for the Bonds, (iii) the payment of a portion of the costs incidental to the organization of the District, (iv) the funding of capitalized interest on the Bonds, and (v) the payment of the costs of issuance of the Bonds. See "THE IMPROVEMENT PROJECT A IMPROVEMENTS" and "APPENDIX A — FORM OF INDENTURE." The Bonds, when issued and delivered, will constitute valid and binding special obligations of the Town payable solely from and secured by the Pledged Revenues and other funds comprising the Trust Estate, consisting primarily of special assessments levied for Improvement Project A Improvements against assessable property located in Improvement Area #1, Improvement Area #2 and Improvement Area #3 of the District (the "Assessments") in accordance with a Service and Assessment Plan, all to the extent and upon the conditions described herein. See "SECURITY FOR THE BONDS; THE INDENTURE." The Bonds are subject to redemption at the times, in the amounts, and at the redemption prices more fully described herein under the sub -caption "DESCRIPTION OF THE BONDS — Redemption Provisions." The Bonds involve a degree of risk and are not suitable for all investors. See `BONDHOLDERS RISKS" and "SUITABILITY FOR INVESTMENT." Prospective purchasers should carefully evaluate the risks and merits of an investment in the Bonds, should consult with their legal and financial advisors before considering a purchase of the Bonds, and should be willing to bear the risks of loss of their investment in the Bonds. The Bonds are not credit enhanced or rated and no application has been made for a rating with respect to the Bonds. THE BONDS ARE SPECIAL OBLIGATIONS OF THE TOWN PAYABLE SOLELY FROM THE PLEDGED REVENUES AND OTHER FUNDS COMPRISING THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWER OF THE TOWN AND ARE PAYABLE SOLELY FROM THE SOURCES IDENTIFIED IN THE INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR TO BE RAISED BY TAXATION, OR OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. NO OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE TOWN'S TAXING POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INTEREST OR REDEMPTION PREMIUM, IF ANY, THEREON. THE TOWN SHALL HAVE NO LEGAL OR MORAL OBLIGATION TO PAY THE BONDS OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE TRUST ESTATE. This cover page contains certain information for quick reference only. It is not a summary of the Bonds. Investors must read this entire Official Statement to obtain information essential to the making of an informed investment decision. The Bonds are offered for delivery when, as, and if issued by the Town and accepted by the Underwriter, subject to, among other things, the approval of the Bonds by the Attorney General of Texas and the receipt of the opinion of McCall, Parkhurst & Horton L.L.P., Bond Counsel, as to the validity of the Bonds and the excludability of interest thereon from gross income for federal income tax purposes. See "APPENDIX D — Form of Opinion of Bond Counsel." Certain legal matters will be passed upon for the Underwriter by its counsel, Andrews Kurth LLP, and for the Developer by its counsel, Miklos Law, PLLC. It is expected that the Bonds will be delivered in book -entry form through the facilities of DTC on or about February 5, 2015. Preliminary; subject to change. Jefferies Res 14-45 Exhibit MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES, YIELDS, AND CUSIP NUMBERS CUSIP Prefix: 96048P $26,175,000' TOWN OF WESTLAKE, TEXAS, (a municipal corporation of the State of Texas located in Denton and Tarrant Counties) SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) Term Bonds, Due , Priced to Yield %; CUSIP Suffix (a) (b) (c) Term Bonds, Due , Priced to Yield %; CUSIP Suffix (a) (b) (c) Term Bonds, Due , Priced to Yield %; CUSIP Suffix (a) (b) (c) Term Bonds, Due , Priced to Yield %; CUSIP Suffix (a) (b) (a) The Bonds are subject to redemption, in whole or in part, prior to stated maturity, at the option of the Town, on any date on or after September 1, 20_ at the prices described herein under "DESCRIPTION OF THE BONDS — Redemption Provisions." (b) The Bonds are also subject to mandatory sinking fund redemption and extraordinary optional redemption as described herein under "DESCRIPTION OF THE BONDS — Redemption Provisions." (c) CUSIP numbers are included solely for the convenience of owners of the Bonds. CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard & Poor's Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. CUSIP numbers are provided for convenience of reference only. None of the Town, the Town's Financial Advisor, the Town's Economic Development Consultant or the Underwriter takes any responsibility for the accuracy of such numbers. Preliminary; subject to change. Res 14-45 Exhibit TOWN OF WESTLAKE, TEXAS TOWN COUNCIL Name Title Term Expires Ma Laura Wheat Mayor 2016 Carol Langdon Mayor Pro Tem 2015 Alesa Belvedere Councilmember 2016 Michael Barrett Councilmember 2016 Wayne Stoltenberg Councilmember 2015 Rick Rennhack Councilmember 2015 TOWN MANAGER FINANCE DIRECTOR TOWN SECRETARY Tom Brymer Debbie Piper Kelly Edwards SERVICE AND ASSESSMENT PLAN CONSULTANT Municap, Inc. FINANCIAL ADVISOR TO TOWN Lawrence Financial Consulting LLC ECONOMIC DEVELOPMENT CONSULTANT Trent Petty, Petty & Associates BOND COUNSEL McCall, Parkhurst & Horton L.L.P. UNDERWRITER'S COUNSEL Andrews Kurth LLP ii TOWN ATTORNEY Boyle & Lowry LLP Res 14-45 Exhibit MAPS SHOWING LOCATION OF THE DISTRICT WITHIN GREATER DALLAS/FORT WORTH AREA (LS' 2 whitesboro az Gai esvl'lle Sherman 69' El Bonham LikeF, 121} 77' Fioherts S '. i1 Sar Aubrey Celina C2 ❑ecatur 3sat Prosper 3ridgeport D"e�rt�vn F�, f � McKihney �1.. �! COflfltll` 1, Frisco _,',il rgyle ewurale GreeitifVille® - = i�LAke- Allen V ' Lewlsvifl v Plano w lie A, 287 1-� C 61_y soul-.se -� Heiler Grapevl,- 4 r Ro kwall Azle Eagle Garland_:L111 I Mountain i*loril1 University Park a sand Richland Fulls lr�'ilry :r Dallas n herford Fort Worth tom' Mesquite Arliti4ton 0alcCl,ff BalchSprings Terrell Wilts Beiibrook Southeast Dunc n,� .ile '. Arlington SeagoMile- Ell ille•- i75 L 377, Crowley 67'.. DeSoto 'Kaufman 377 Man�feld Burleson Red teak 57a Scurry Midlothian inbury shun ' i7ati k fi7 .� SNaaahaehiz Cleburne hhahank 287 . Ennis A leaf R lien Rose IM Res 14-45 Exhibit ,. t Teasrvaurr ��Pd~ra,� s axl FIG'Nef MDUnd .--, Hlghwy ila Wichita T—1 _ �F� � gY# VMtiP pr �j r �• ��~ .rte " ,, . � IR -aa:` �e7drYm 7t, L` !1. SI F4'iPl' i e. 17fe aR Ga4e''�, w r!'o"Y A'� F ✓ kellee Nadel ft00 [7 Q 46 " k Eau I �ivd Bi+a m k.. PU Grapevine • Y Golder., Tna" �lud -• Kelger Fkxy - E €5a1 s Idd 2 + Keller s f - {' " Vl Cc+mmcutal SWd Leumlr+enlfl LhA �' Ye". . V. o ' M1L Tanana MY - * �. � �'� Flfll loWwr" rid 2km = starnnsR4 s. Ccalfey�i�le lade ed f l a6 e4 nG45L Gt v i3 P M1Aeahn _- r '�: T' A • ."sk 1�"Qer h111�saQ�¢t, r, _ -'� G v`SJ7.• �:.Kailc.ln., i ...Cr srKr c�,3°x�, G.A SJ Crep C Trolhp CWb O ., k 4s4at s i-'� F-1h S cl L t Luke `'ri �- F 60 a,, _ l br 'v ���—z_lnverness=Per � Westlake 'f ;� �) "v� ` '"i:. � W4k,•�'.` • 1 It "01, firakc,b men.[ f _. fink { Fui. aks or i MAP SHOWING BOUNDARIES OF DISTRICT, IMPROVEMENT AREA #1, IMPROVEMENT AREA #2 AND IMPROVEMENT AREA #3 District Boundaries Improvement Area #1 (Mixed -Use Core) Res 14-45 Exhibit Improvement Area #2 (West Residential) Improvement Area #3 (East Residential) vi Res 14-45 Exhibit FOR PURPOSES OF COMPLIANCE WITH RULE 15C2-12 OF THE SECURITIES AND EXCHANGE COMMISSION, THIS DOCUMENT CONSTITUTES AN OFFICIAL STATEMENT OF THE TOWN WITH RESPECT TO THE BONDS THAT HAS BEEN DEEMED ` FINAL " BY THE TOWN AS OF ITS DATE EXCEPT FOR THE OMISSION OF NO MORE THAN THE INFORMATION PERMITTED BY R ULE 15C2-12. NO DEALER, BROKER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED BY THE TOWN OR THE UNDERWRITER TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT, 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 OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY AND THERE SHALL BE NO OFFER, SOLICITATION OR SALE OF THE BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE UNITED STATES FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION. THE INFORMATION SET FORTH HEREIN HAS BEEN FURNISHED BY THE TOWN AND OBTAINED FROM SOURCES, INCLUDING THE DEVELOPER, WHICH ARE BELIEVED BY THE TOWN AND THE UNDERWRITER TO BE RELIABLE, BUT IT IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS, AND IS NOT TO BE CONSTRUED AS A REPRESENTATION OF THE UNDERWRITER. THE INFORMATION AND EXPRESSIONS OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE, AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT, NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE TOWN OR THE DEVELOPER SINCE THE DATE HEREOF. NEITHER THE TOWN NOR THE UNDERWRITER MAKE ANY REPRESENTATION AS TO THE ACCURACY, COMPLETENESS, OR ADEQUACY OF THE INFORMATION SUPPLIED BY THE DEPOSITORY TRUST COMPANY FOR USE IN THIS OFFICIAL STATEMENT. THE TOWN, THE DEVELOPER, THE TOWN'S FINANCIAL ADVISOR, THE TOWN'S ECONOMIC DEVELOPMENT CONSULTANT AND THE UNDERWRITER MAKE NO REPRESENTATIONS AS TO THE ACCURACY OF THE APPRAISAL REPORT OR THE SOUNDNESS OF ANY OF THE ASSUMPTIONS, THE VALUATION TECHNIQUES OR THE METHODOLOGY CONTAINED THEREIN. PROSPECTIVE INVESTORS SHOULD READ THE APPRAISAL REPORT IN ITS ENTIRETY, INCLUDING THE LIMITATIONS AND QUALIFICATIONS CONTAINED THEREIN, PRIOR TO MAKING A DECISION TO PURCHASE THE BONDS. SEE "APPRAISAL OF PROPERTY WITHIN THE DISTRICT", "BONDHOLDERS' RISKS - THE APPRAISAL AND THE APPRAISAL METHODOLOGY" AND "APPENDIX F - APPRAISAL". THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR HAS THE INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH LAWS. THE REGISTRATION OR QUALIFICATION OF THE BONDS UNDER THE SECURITIES LAWS OF ANY JURISDICTION IN WHICH THEY MAY HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, SHALL NOT BE REGARDED AS A RECOMMENDATION THEREOF. NONE OF SUCH JURISDICTIONS, OR ANY OF THEIR AGENCIES, HAVE PASSED UPON THE MERITS OF THE BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. CERTAIN STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE IN THIS OFFICIAL STATEMENT CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, SECTION 21E OF THE UNITED STATES EXCHANGE ACT OF 1934, AS AMENDED, AND SECTION 27A OF THE SECURITIES ACT. SUCH STATEMENTS ARE GENERALLY IDENTIFIABLE BY THE TERMINOLOGY USED SUCH AS "PLAN," "EXPECT," "ESTIMATE," "PROJECT," "ANTICIPATE," `BUDGET" OR OTHER SIMILAR WORDS. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, vii Res 14-45 Exhibit UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE TOWN DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ANY OF ITS EXPECTATIONS OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR, OTHER THAN AS DESCRIBED UNDER "CONTINUING DISCLOSURE" HEREIN. viii Res 14-45 Exhibit TABLE OF CONTENTS INTRODUCTION.................................................... 1 PLAN OF DEVELOPMENT AND FINANCE ....... 1 Development Plan ............................................. 1 Financing of Public Improvements .................... 2 DESCRIPTION OF THE BONDS ........................... 3 General Description ........................................... 3 Redemption Provisions ...................................... 3 SECURITY FOR THE BONDS; THE INDENTURE ........................................................................... 5 General.............................................................. 5 Pledged Revenues .............................................. 6 Collection and Deposit of Assessments ............. 6 Unconditional Levy of Assessments ................. 7 Perfected Security Interest ................................. 7 Pledged Revenue Fund ...................................... 8 Reserve Fund ..................................................... 8 Prepayment Reserve Account of the 33 Reserve Fund .............................................. 9 Delinquency Reserve Account of the 34 Reserve Fund .............................................. 9 Use of Reserve Accounts to Pay Debt 35 Service...................................................... 10 Administrative Fund is Not Security for 35 theBonds .................................................. 10 Defeasance....................................................... 10 Events of Default ............................................. 11 Remedies in Event of Default .......................... 11 Restriction on Owner's Actions ...................... 12 Application of Revenues and Other 42 Moneys After Event of Default ................ 13 Investment or Deposit of Funds ....................... 13 Additional Bonds ............................................. 13 SOURCES AND USES OF FUNDS ...................... 15 DEBT SERVICE REQUIREMENTS .................... 16 OVERLAPPING TAXES AND DEBT .................. 17 Taxation of Property Identified for 43 Agricultural Use ....................................... 18 ASSESSMENT PROCEDURES ............................ 18 General............................................................ 18 Assessment Methodology ................................ 19 Collection and Enforcement of Assessments ............................................. 20 Assessment Amounts ....................................... 21 Prepayment of Assessments ............................ 22 Priority of Lien ................................................ 22 Foreclosure Proceedings .................................. 22 THETOWN........................................................... 23 Background..................................................... 23 Town Government ........................................... 23 Major Employers ............................................. 24 THE DISTRICT ..................................................... 24 General............................................................ 24 Powers and Authority ...................................... 24 lx THE IMPROVEMENT PROJECT A IMPROVEMENTS ......................................... 24 General............................................................ 24 Maintenance of Improvements ........................ 25 THE DEVELOPMENT .......................................... 26 Overview......................................................... 26 Conceptual Renderings of Development......... 27 Development Plans .......................................... 28 Residential....................................................... 29 Commercial..................................................... 29 Zoning/Permitting........................................... 31 Environmental................................................. 31 Utilities............................................................ 31 THE DEVELOPER ................................................ 31 Description of the Developer ........................... 32 Executive Biography ....................................... 33 Co -Developer: Building Villages, LLC........... 33 History and Financing of the Development ............................................ 34 THE DEVELOPMENT CONSULTANT .............. 35 THE SPECIAL ASSESSMENT CONSULTANT. 35 APPRAISAL OF PROPERTY WITHIN THE DISTRICT....................................................... 35 TheAppraisal .................................................. 35 Value to Assessment Burden Ratio ................. 39 BONDHOLDERS' RISKS ..................................... 40 Assessment Limitations ................................... 41 Risks Related to the Current Real Estate Market...................................................... 42 Competition..................................................... 42 Loss of Tax Exemption ................................... 43 Bankruptcy...................................................... 43 Direct and Overlapping Indebtedness, Assessments and Taxes ............................ 43 Depletion of Reserve Fund .............................. 43 Hazardous Substances ..................................... 43 Regulation....................................................... 44 Bondholders' Remedies and Bankruptcy............................................... 44 No Acceleration ............................................... 45 Bankruptcy Limitation to Bondholders' Rights....................................................... 45 Management and Ownership ........................... 46 General Risks of Real Estate Investment and Development ...................................... 46 Dependence on the Developer ......................... 46 Agricultural Use Valuation and Redemption Rights ................................... 47 TAX MATTERS .................................................... 47 Opinion............................................................ 47 Federal Income Tax Accounting Treatment Of Original Issue Discount................................................... 48 Res 14-45 Exhibit Collateral Federal Income Tax FORM OF INDENTURE Consequences ........................................... 49 State, Local And Foreign Taxes ...................... 50 Future and Proposed Legislation ..................... 50 LEGAL MATTERS ............................................... 50 Legal Proceedings ........................................... 50 Legal Opinions ................................................ 50 Litigation — The Town ..................................... 51 Litigation — The Developer ............................. 51 SUITABILITY FOR INVESTMENT .................... 52 ENFORCEABILITY OF REMEDIES ................... 52 NORATING.......................................................... 52 CONTINUING DISCLOSURE .............................. 52 TheTown ........................................................ 52 The Developer ................................................. 53 UNDERWRITING ................................................. 53 REGISTRATION AND QUALIFICATION OF BONDS FOR SALE ........................................ 53 LEGAL INVESTMENT AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS.......... 54 INVESTMENTS.................................................... 54 INFORMATION RELATING TO THE TRUSTEE ............................................. 56 SOURCES OF INFORMATION ........................... 56 General............................................................ 56 Source of Certain Information ......................... 57 Experts............................................................. 57 Updating of Official Statement ........................ 57 FORWARD-LOOKING STATEMENTS .............. 57 AUTHORIZATION AND APPROVAL ................ 58 APPENDIX A FORM OF INDENTURE APPENDIX B SERVICE AND ASSESSMENT PLAN APPENDIX C DEVELOPER'S BUSINESS PLAN APPENDIX D FORM OF OPINION OF BOND COUNSEL APPENDIX E-1 FORM OF TOWN'S DISCLOSURE AGREEMENT APPENDIX E-2 FORM OF DEVELOPER'S DISCLOSURE AGREEMENT APPENDIX F APPRAISAL APPENDIX G FINANCING AGREEMENT APPENDIX H BOOK -ENTRY ONLY SYSTEM x Res 14-45 Exhibit [This page is intentionally left blank.] Res 14-45 Exhibit OFFICIAL STATEMENT $26,175,000 TOWN OF WESTLAKE, TEXAS, (a municipal corporation of the State of Texas located in Denton and Tarrant Counties) SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) INTRODUCTION The purpose of this Official Statement, including the cover page, inside cover and Appendices hereto, is to provide certain information in connection with the issuance and sale by the Town of Westlake, Texas (the "Town"), of its $26,175,000* aggregate principal amount of Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) (the `Bonds"). PROSPECTIVE INVESTORS SHOULD BE AWARE OF CERTAIN RISK FACTORS, ANY OF WHICH, IF MATERIALIZED TO A SUFFICIENT DEGREE, COULD DELAY OR PREVENT PAYMENT OF PRINCIPAL OF AND/OR INTEREST ON THE BONDS. THE BONDS ARE NOT A SUITABLE INVESTMENT FOR ALL INVESTORS. See `BONDHOLDERS' RISKS" and "SUITABILITY FOR INVESTMENT." The Bonds are being issued by the Town pursuant to the Public Improvement District Assessment Act, Subchapter A of Chapter 372, Texas Local Government Code, as amended (the "PID Act"), an ordinance enacted by the Town Council on January 15, 2015 (the "Bond Ordinance"), and an Indenture of Trust, dated as of February 1, 2015 (the "Indenture"), entered into by and between the Town and the Trustee. The Bonds will be secured by special assessments (the "Assessments") levied against assessable property within Improvement Area #1, Improvement Area 42 and Improvement Area #3 of the Solana Public Improvement District (the "District") pursuant to a separate ordinance enacted by the Town Council on January 15, 2015 (the "Assessment Ordinance"). See "PLAN OF FINANCE" and "THE DEVELOPMENT." Reference is made to the Indenture for a full statement of the authority for, and the terms and provisions of, the Bonds. All capitalized terms used in this Official Statement that are not otherwise defined herein shall have the meanings set forth in the Indenture. See "APPENDIX A — FORM OF INDENTURE." Set forth herein are brief descriptions of the Town, the District, the Bond Ordinance, the Assessment Ordinance, the Service and Assessment Plan (defined herein), the Appraisal (defined herein), Maguire Partners — Solana Land, L.P. (the "Developer"), Building Villages, LLC (the "Co -Developer") and the Developer Consultant (defined herein), together with summaries of terms of the Bonds and the Indenture and certain provisions of the PID Act. All references herein to such documents and the PID Act are qualified in their entirety by reference to such documents or such PID Act and all references to the Bonds are qualified by reference to the definitive forms thereof and the information with respect thereto contained in the Indenture. Copies of these documents may be obtained during the period of the offering of the Bonds from the Underwriter, Jefferies LLC, 300 Crescent Court, Suite 500, Dallas, Texas 75201, telephone number (972) 701-3037. The full text of the Indenture appears in APPENDIX A and the full text of the Service and Assessment Plan appears as APPENDIX B. The information provided under this caption "INTRODUCTION" is intended to provide a brief overview of the information provided in the other captions herein and is not intended, and should not be considered, fully representative or complete as to the subjects discussed hereunder. PLAN OF DEVELOPMENT AND FINANCE Development Plan The District encompasses approximately 85 acres being developed as a master -planned mixed-use development known as "Westlake Entrada" that is expected to include, among other things, condominiums, Preliminary; subject to change. Res 14-45 Exhibit residential villas, hotels, office, retail, commercial, institutional and hospitality uses, and a wedding event center (the "Development"). The development of the Development will begin with the construction of public improvements in three improvement areas that comprise the entire 85 -acre District. Improvement Area #1 (the Mixed -Use Core) consists of approximately 53 acres. Improvement Area #2 (West Residential) consists of the approximately 18 acres. Improvement Area #3 (East Residential) consists of approximately 14 acres. The boundaries of the District, Improvement Area #1, Improvement Area #2 and Improvement Area #3 are shown on page v. The Developer plans to develop over a period of approximately three years the public infrastructure to serve and benefit the entire District (the "Improvement Project A Improvements") as well as additional public infrastructure to serve and benefit only Improvement Area #1 (the "Improvement Project B Improvements"). See " — Financing of Public Improvements." The Developer expects to develop the remainder of the Development in phases over a 7- to 10 -year period of time. See "THE DEVELOPMENT." Financing of Public Improvements Pursuant to the Construction, Funding, and Acquisition Agreement (the "Financing Agreement"), between the Town and the Developer, the Town has agreed to pay or reimburse the Developer for the costs of the construction, acquisition or purchase of certain public improvements within the District and the Developer has agreed to convey and dedicate certain public improvements to the Town. Proceeds of the Bonds will be used to finance a portion of the costs of the Improvement Project A Improvements. Payment of the Bonds is secured by a pledge of and a lien upon the Pledged Revenues, consisting primarily of the Assessments, and other funds comprising the Trust Estate, all to the extent and upon the conditions described herein and in the Indenture. The Bonds shall never constitute an indebtedness or general obligation of the Town, the State of Texas (the "State") or any other political subdivision of the State, within the meaning of any Constitutional provision or statutory limitation whatsoever, but the Bonds are limited or special obligations of the Town payable solely from the Trust Estate as provided in the Indenture. Neither the faith and credit nor the taxing power of the Town, the State or any other political subdivision of the State is pledged to the payment of the Bonds. See "SECURITY FOR THE BONDS; THE INDENTURE," "ASSESSMENT PROCEDURES" and "THE IMPROVEMENT PROJECT A IMPROVEMENTS." A portion of the proceeds of the Bonds will be used to provide funds for the payment of a portion of the costs of construction, acquisition and purchase of the Improvement Project A Improvements. Proceeds of the Bonds will also provide funds for (i) the funding of the Reserve Fund in the amount of the Reserve Fund Requirement for the Bonds, (ii) the payment of a portion of the costs incidental to the organization of the District, (iii) the funding of capitalized interest on the Bonds, and (iv) the payment of the costs of issuance of the Bonds. See "SOURCES AND USES OF FUNDS" and "THE IMPROVEMENT PROJECT A IMPROVEMENTS." The balance of the costs of the Improvement Project A Improvements will initially be borne by the Developer and reimbursed to the Developer over time pursuant to the Reimbursement Agreement dated as of January 15, 2015 (the "Reimbursement Agreement") between the Town and the Developer. See "THE IMPROVEMENT PROJECT A IMPROVEMENTS - General." The Town expects that it will, but is under no obligation to, issue Additional Bonds in 2017 or later to finance its payment obligations under the Reimbursement Agreement (see "SECURITY FOR THE BONDS; THE INDENTURE - Additional Bonds" for details on the criteria which must be met before the Town will be required to issue Additional Bonds). All bonds issued to finance the costs of the Improvement Project A Improvements, including the Bonds, and the Town's payment obligations under the Reimbursement Agreement with respect to the Improvement Project A Improvements, will be secured by the Pledged Revenues. Any bonds issued to finance the costs of the Improvement Project B Improvements will be secured by separate special assessments levied against assessable property in Improvement Area #1 only. See "SECURITY FOR THE BONDS; THE INDENTURE — Additional Bonds," "THE IMPROVEMENT PROJECT A IMPROVEMENTS" and "THE DEVELOPMENT." When compared to the estimated cumulative value of the properties appraised in the District ($88,070,000), the principal amount of the Bonds has an estimated value to assessment burden ratio of 3.365* to 1. See Preliminary, subject to change. Res 14-45 Exhibit "APPRAISAL OF PROPERTY WITHIN THE DISTRICT — Value to Assessment Burden Ratio." Also see "BONDHOLDERS' RISKS - The Appraisal and the Appraisal Methodology" for details on the methodology utilized by the Appraiser and certain risks associated therewith. DESCRIPTION OF THE BONDS General Description The Bonds will mature on the dates and in the amounts set forth in the inside cover page of this Official Statement. Interest on the Bonds will accrue from their date of delivery to the Underwriter, will be computed on the basis of a 360 -day year of twelve 30 -day months and will be payable on each March 1 and September 1, commencing September 1, 2015 (each an "Interest Payment Date"), until maturity or prior redemption. U.S. Bank National Association is the initial Trustee, Paying Agent and Registrar for the Bonds. The Bonds will be issued in fully registered form, without coupons, in authorized denominations of $25,000 of principal amount and any integral multiple of $5,000 in excess thereof ("Authorized Denominations"). Upon initial issuance, the ownership of the Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"), and purchases of beneficial interests in the Bonds will be made in book -entry only form. See "APPENDIX H — BOOK -ENTRY ONLY SYSTEM" and "SUITABILITY FOR INVESTMENT." Redemption Provisions Optional Redemption. The Town reserves the right and option to redeem the Bonds before their scheduled maturity dates, in whole or in part, on September 1, 20_, or on any date thereafter, such redemption date or dates to be fixed by the Town, at the prices shown below (expressed as a percentage of par), plus accrued interest to the redemption date. Redemption Date Redemption Price September 1, 20 — August 31, 20 September 1, 20 — August 31, 20 September 1, 20 — August 31, 20_ September 1, 20 and thereafter See "SECURITY FOR THE BONDS; THE INDENTURE — Pledged Revenues" and "— Additional Bonds" for an explanation of the Town's expectations with respect to the possible issuance of Additional Bonds. Extraordinary Optional Redemption. The Bonds are subject to extraordinary optional redemption prior to their scheduled maturity on the first day of any month after the required notice of redemption at a redemption price equal to 100% of the principal amount of the Bonds, or portions thereof, to be redeemed plus accrued interest to the redemption date from voluntary prepayments of Assessments by property owners ("Prepayments"), including related transfers to the Redemption Fund. See "ASSESSMENT PROCEDURES — Prepayment of Assessments" for the defmition and description of "Prepayments." Notwithstanding the foregoing, the Trustee will not be required to make an extraordinary optional redemption of Bonds unless it has at least $25,000 available in the Redemption Fund with which to redeem Bonds. No redemption shall be made which results in a Bond remaining outstanding in a principal amount less than an Authorized Denomination. See "APPENDIX A — FORM OF INDENTURE." Mandatory Sinking Fund Redemption. The Bonds are subject to mandatory sinking fund redemption prior to their respective maturities and will be redeemed by the Town in part at a price of 100% of the principal amount thereof, plus accrued interest to the redemption date, from moneys available for such purpose in the Principal and Interest Account of the Bond Fund pursuant to the Indenture, on the dates and in the respective principal amounts as set forth in the following schedules: Res 14-45 Exhibit TERM BONDS DUE SEPTEMBER 1, 20_ Redemption Date Principal Amount September 1, 20 $ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_f TERM BONDS DUE SEPTEMBER 1, 20_ Redemption Date Principal Amount September 1, 20 $ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_t TERM BONDS DUE SEPTEMBER 1, 20_ Redemption Date Principal Amount September 1, 20 $ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_t TERM BONDS DUE SEPTEMBER 1, 20_ Redemption Date Principal Amount September 1, 20 $ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_t t Stated maturity. At least thirty (30) days prior to each mandatory sinking fund redemption date, the Trustee will select a principal amount of Bonds equal to the sinking fund installment amount for such date of such maturity of Bonds to be redeemed, will call such Bonds for redemption on such scheduled mandatory sinking fund redemption date, and shall give notice of such redemption, as provided in the Indenture. The principal amount of Bonds required to be redeemed on any mandatory sinking fund redemption date shall be reduced, at the option of the Town, by the principal amount of any Bonds of such maturity which, at least 30 days prior to the sinking fund redemption date shall have been acquired by the Town at a price not exceeding the principal amount of such Bonds plus accrued unpaid interest to the date of purchase thereof, and delivered to the Trustee for cancellation. The principal amount of Bonds required to be redeemed on any mandatory sinking fund redemption date shall be reduced on a pro rata basis among sinking fund installments for each maturity of Bonds by the principal amount of any Bonds which, at least 30 days prior to the mandatory sinking fund redemption date, shall have been redeemed pursuant to the optional redemption or extraordinary optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Notice of Redemption. Notice of any redemption shall be given by the Trustee at least thirty (30) days prior to the redemption date by giving written notice to the Owner of each Bond to be redeemed in whole or in part at the address shown on the Register by first-class mail, postage prepaid. Any such notice shall be conclusively presumed 4 Res 14-45 Exhibit to have been duly given, whether or not the Owner receives such notice. Notice of redemption having been given as provided in the Indenture, the Bonds or portions thereof called for redemption shall become due and payable on the date fixed for redemption provided that funds for the payment of the redemption price of such Bonds to the date fixed for redemption are on deposit with the Trustee; thereafter, such Bonds or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Bonds are presented and surrendered for payment on such date. The Town has the right to rescind any optional redemption or extraordinary optional redemption by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption shall be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Trustee shall mail notice of rescission of redemption in the same manner notice of redemption was originally provided. Additional Provisions with Respect to Redemption. Bonds may be redeemed in increments of $5,000 provided that no redemption shall cause the principal amount of any Bond to be less than the minimum Authorized Denomination. If less than all of the Bonds are to be redeemed, the Bonds to be redeemed shall be selected by any method selected by the Trustee that results in a random selection, and treating each minimum Authorized Denomination of the Bonds as a single Bond for such purposes. Upon surrender of any Bond in part, the Trustee, in accordance with the provisions of the Indenture, shall authenticate and deliver in exchange thereof a Bond or Bonds of like tenor, maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Bond or Bonds so surrendered. SECURITY FOR THE BONDS; THE INDENTURE General THE BONDS ARE SPECIAL OBLIGATIONS OF THE TOWN PAYABLE SOLELY FROM THE PLEDGED REVENUES AND OTHER FUNDS COMPRISING THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWER OF THE TOWN AND ARE PAYABLE SOLELY FROM THE SOURCES IDENTIFIED IN THE INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR TO BE RAISED BY TAXATION, OR OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. NO OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE TOWN'S TAXING POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INTEREST OR REDEMPTION PREMIUM, IF ANY, THEREON. THE TOWN SHALL HAVE NO LEGAL OR MORAL OBLIGATION TO PAY THE BONDS OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE TRUST ESTATE. The principal of, premium, if any, and interest on the Bonds are secured by a pledge of and a lien upon the Pledged Revenues, consisting primarily of the Assessments, which will be levied against assessable property within Improvement Area 41 of the District (the "Improvement Area #1 Assessed Parcels"), Improvement Area #2 of the District (the "Improvement Area 42 Assessed Parcels") and Improvement Area #3 of the District (the "Improvement Area #3 Assessed Parcels"), and other funds comprising the Trust Estate, all to the extent and upon the conditions described herein and in the Indenture. In accordance with the PID Act, the Town has caused the preparation of a Service and Assessment Plan (as amended and supplemented, the "Service and Assessment Plan"), which describes, among other things, the special benefit received by the property within Improvement Area #1, Improvement Area #2 and Improvement Area #3 by virtue of the construction of the Improvement Project A Improvements, provides the basis and justification for the determination of special benefit on such property, establishes the methodology for the levy of the Assessments and provides for the allocation of Pledged Revenues for payment of principal of, premium, if any, and interest on the Bonds. The Service and Assessment Plan is reviewed and updated annually for the purpose of determining the annual budget for improvements and the Annual Installments (as defined below) of Assessments due in a given year. The determination by the Town of the assessment methodology set forth in the Service and Assessment Plan is the result of the discretionary exercise by the Town Council of its legislative authority and governmental powers and is conclusive and binding on all current and future owners and landowners within the District. See "APPENDIX B — SERVICE AND ASSESSMENT PLAN." Res 14-45 Exhibit Pledged Revenues The Town is authorized by the PID Act, the Assessment Ordinance and other provisions of law to finance the Improvement Project A Improvements by levying the Assessments upon the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels. For a description of the assessment methodology and the amounts of the Assessments anticipated to be levied in Improvement Area #1, Improvement Area #2 and Improvement Area #3, see "ASSESSMENT PROCEDURES" and "APPENDIX B — SERVICE AND ASSESSMENT PLAN." Pursuant to the Indenture, "Pledged Revenues" consist of (i) Assessment Revenues (excluding the portion of the Assessments and Annual Installments collected for the payment of Administrative Expenses and Delinquent Collection Costs, as set forth in the Service and Assessment Plan), (ii) moneys held in the Pledged Funds, and (iii) any additional revenues that the Town may pledge to the payment of the Bonds and Additional Bonds. "Assessment Revenues" means the revenues received by the Town from the collection of Assessments and Annual Installments, including Foreclosure Proceeds. "Annual Installment" means, with respect to each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel, each annual payment of the Assessments as shown on the Assessment Roll attached as Exhibit E to the Service and Assessment Plan. Assessments also include any supplemental assessments levied in accordance with Sections 372.019 and 372.020 of the PID Act. The Town will covenant in the Indenture that it will take and pursue all reasonable actions permissible under Applicable Laws to cause the Assessments to be collected and the liens thereof to be enforced continuously, in the manner and to the maximum extent permitted by Applicable Laws, and to cause no reduction, abatement or exemption in the Assessments; provided that the Town is not required to expend funds for collection and enforcement of the Assessments other than funds on deposit in the Administrative Fund. See "SECURITY FOR THE BONDS; THE INDENTURE — Pledged Revenue Fund," "APPENDIX A — FORM OF INDENTURE" and "APPENDIX B — SERVICE AND ASSESSMENT PLAN." The PID Act provides that the Assessments (including any reassessment, with interest, the expense of collection and reasonable attorney's fees, if incurred) are a first and prior lien (the "Assessment Lien") against the property assessed, superior to all other liens or claims, except liens and claims by the State, counties, school districts, or municipalities for ad valorem taxes, and are a personal liability of and charge against the owners of property, regardless of whether the owners are named. Pursuant to the PID Act, the Assessment Lien is effective from the date of the Assessment Ordinance until the Assessments are paid, and is enforceable by the Town Council in the same manner that an ad valorem property tax levied against real property may be enforced by the Town Council. See "ASSESSMENT PROCEDURES." If homestead rights are properly claimed by a property owner prior to the attachment of the Assessment Lien, the Assessment Lien may not be foreclosed upon; however, any unpaid Assessment or Annual Installment will be an unsecured personal liability of such property owner. As of the date of adoption of the Assessment Ordinance, no such homestead rights will have been claimed on property within Improvement Area #1, Improvement Area #2 or Improvement Area #3. See `BONDHOLDERS' RISKS — Assessment Limitations." Collection and Deposit of Assessments The Assessments shown on the Assessment Roll for Improvement Area #1, Improvement Area #2 and Improvement Area #3, together with the interest thereon, shall be applied to the payment of the principal of and interest on the Bonds as and to the extent provided in the Service and Assessment Plan and the Indenture. The Assessments levied to pay the principal amount of the Bonds, together with interest thereon, are payable in Annual Installments established by the Assessment Ordinance and the Service and Assessment Plan to correspond, as nearly as practicable, to the debt service requirements for the Bonds (except for the portions of the interest rate component that are allocated for deposit to the Prepayment Reserve Account and the Delinquency Reserve Account of the Reserve Fund, as further described herein). An Assessment to pay debt service on the Bonds has been made payable in the Assessment Ordinance in each fiscal year preceding the date of final maturity of the Bonds which, if collected, will be sufficient to pay the principal of and interest on the Bonds. Each Annual Installment is payable as provided in the Service and Assessment Plan and the Assessment Ordinance. 6 Res 14-45 Exhibit A record of the Assessments on each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel which are to be collected in each year during the term of the Bonds is shown on the Assessment Roll. Assessment Revenues (excluding the portion of the Assessments and Annual Installments collected for the payment of Administrative Expenses and Delinquent Collection Costs, as set forth in the Service and Assessment Plan) shall be deposited into the Pledged Revenue Fund, except that (i) amounts received as Prepayments shall be deposited into the Redemption Fund and (ii) the portions of the interest rate component of the Assessments that are allocated for deposit to the Prepayment Reserve Account and the Delinquency Reserve Account of the Reserve Fund shall be deposited to such accounts. Any portions of Assessments collected to pay Administrative Expenses shall be deposited in the Administrative Fund and shall not constitute Pledged Revenues. Unconditional Levy of Assessments The Town has imposed Assessments on the property within Improvement Area #1, Improvement Area #2 and Improvement Area #3 to pay the principal of and interest on the Bonds scheduled for payment from Pledged Revenues as described in the Indenture and in the Service and Assessment Plan and coming due during each Fiscal Year. The Assessments are effective from the date, and strictly in accordance with the terms, of the Assessment Ordinance. Each Assessment may be paid immediately in full or in periodic Annual Installments over a period of time equal to the term of the Bonds, which installments shall include interest on the Assessments. Each Annual Installment, including the interest on the unpaid amount of an Assessment, shall be assessed on October 1 of each year and shall be due by January 31 of the following year. Each Annual Installment together with interest thereon shall be delinquent if not paid prior to February 1 of the following year. The initial Annual Installments will be due on October 1, 2015. As authorized by Section 372.003(b)(14) of the PID Act, the Town has levied, assessed, and will collect, each year while the Bonds are Outstanding and unpaid, commencing October 1, 2015, Assessments to pay Administrative Expenses. The Assessments to pay Administrative Expenses shall remain in effect from year to year until all Bonds are finally paid or until the Town adjusts the levy after an annual review in any year pursuant to Section 372.015(d) of the PID Act. The Assessments to pay Administrative Expenses shall be due in the manner set forth in the Assessment Ordinance on October 1 of each year and shall be delinquent if not paid prior to February 1 of the following year. Assessments levied to pay Administrative Expenses do not secure repayment of the Bonds. There will be no split payment of Assessments or discount for the early payment of Assessments; provided, however, that in the event a property owner elects to prepay such property owner's Assessments in full, such property owner will only be required to pay interest accrued on the Assessments to the date of such prepayment, in essence providing such property owner a discount on the interest portion of the Assessments (see "SECURITY FOR THE BONDS; THE INDENTURE - Reserve Fund" and "SECURITY FOR THE BONDS; THE INDENTURE - Prepayment Reserve Account of the Reserve Fund"). Failure to pay an Annual Installment when due shall not accelerate the payment of the remaining Annual Installments of the Assessments and such remaining Annual Installments (including interest) shall continue to be due and payable at the same time and in the same amount and manner as if such default had not occurred. Perfected Security Interest Chapter 1208, Texas Government Code, applies to the issuance of the Bonds and the pledge of the Pledged Revenues and such pledges are, therefore, valid, effective, and perfected. The Town will covenant in the Indenture that, should Texas law be amended at any time while the Bonds are outstanding and unpaid, the result of such amendment being that the pledge of such revenues is subject to the fling requirements of Chapter 9, Texas Business & Commerce Code, in order to preserve to the registered owners of the Bonds a security interest in such pledge, the Town will take such measures as it determines are reasonable and necessary to enable a fling of a security interest in said pledge to occur. See "APPENDIX A — FORM OF INDENTURE." Res 14-45 Exhibit Pledged Revenue Fund The Town has created under the Indenture a Pledged Revenue Fund held by the Trustee. Immediately upon receipt thereof, the Town shall deposit or cause to be deposited the Pledged Revenues into the Pledged Revenue Fund. From time to time as needed to pay the obligations relating to the Bonds, but no later than five business days before each Interest Payment Date, the Trustee shall withdraw from the Pledged Revenue Fund, and transfer to the Principal and Interest Account of the Bond Fund, an amount, taking into account any amounts then on deposit in such Principal and Interest Account and any expected transfers from the Capitalized Interest Account to the Principal and Interest Account, such that the amount on deposit in the Principal and Interest Account equals the principal (including any sinking fund installments) and interest due on the Bonds on the next Interest Payment Date. If, after the foregoing transfers and any transfer from the Reserve Fund as described under "Reserve Fund" below, there are insufficient funds to make the payments provided in the preceding paragraph, the Trustee shall apply the available funds in the Principal and Interest Account first to the payment of interest, then to the payment of principal (including any sinking fund installments) on the Bonds. The Trustee shall transfer Prepayments to the Redemption Fund promptly after deposit of such amounts into the Pledged Revenue Fund. The Trustee shall transfer Foreclosure Proceeds relating to Assessments first to the Reserve Fund to restore any transfers from the Reserve Fund made with respect to the Improvement Area #1 Assessed Parcel(s), the Improvement Area #2 Assessed Parcel(s) and an Improvement Area #3 Assessed Parcel(s) to which the Foreclosure Proceeds relate, and second, to the Redemption Fund promptly after deposit of such amounts into the Pledged Revenue Fund. Any Pledged Revenues remaining after no Bonds are Outstanding may be used for any lawful purpose for which Assessments may be used under the PID Act. Reserve Fund Pursuant to the Indenture, a Reserve Account will be created within the Reserve Fund for the benefit of the Bonds Similarly Secured (consisting of Outstanding Bonds and Additional Bonds) and held by the Trustee and will be funded with proceeds of the Bonds in the amount of the Reserve Fund Requirement. Pursuant to the Indenture, the "Reserve Fund Requirement" for the Bonds Similarly Secured shall be an amount equal to the least of (i) Maximum Annual Debt Service on the Bonds Similarly Secured as of the date of issuance, (ii) 125% of average Annual Debt Service on the Bonds Similarly Secured as of the date of issuance, and (iii) 10% of the proceeds of the Bonds Similarly Secured; provided, however, that such amount shall be reduced by the amount of any transfers made in connection with an extraordinary optional redemption as described in the next following paragraph; and provided further that as a result of an optional redemption, the Reserve Fund Requirement shall be reduced by a percentage equal to the principal amount of Bonds Similarly Secured redeemed by such optional redemption divided by the total principal amount of the Outstanding Bonds Similarly Secured prior to such redemption. As of the date of delivery of the Bonds, the Reserve Fund Requirement equals $ , which is an amount equal to [the Maximum Annual Debt Service on the Bonds, and such amount will be fully funded with Bond proceeds]. Whenever, on any Interest Payment Date, or on any other date at the request of a Town Representative, the amount in the Reserve Account of the Reserve Fund exceeds the Reserve Fund Requirement, the Trustee must provide written notice to the Town Representative of the amount of the excess and transfer such excess to the Pledged Revenue Fund. In the event of an extraordinary optional redemption of Bonds from the proceeds of a Prepayment, the Trustee, pursuant to written directions from the Town, shall transfer from the Reserve Account of the Reserve Fund to the Redemption Fund the amount specified in such directions, which shall be an amount equal to the principal amount of Bonds to be redeemed multiplied by the lesser of (i) the amount required to be in the Reserve Account of the Reserve Fund divided by the principal amount of Outstanding Bonds prior to the redemption, and (ii) the amount actually in the Reserve Account of the Reserve Fund divided by the principal Res 14-45 Exhibit amount of Outstanding Bonds prior to the redemption. If after such transfer, and after applying investment earnings on the Prepayment toward payment of accrued interest, there are insufficient funds to pay the principal amount plus accrued and unpaid interest on such Bonds to the date fixed for redemption of the Bonds to be redeemed as a result of such Prepayment, the Trustee shall transfer an amount equal to the shortfall from the Prepayment Reserve Account to the Redemption Fund to be applied to the redemption of the Bonds. Prepayment Reserve Account of the Reserve Fund Pursuant to the Indenture, a Prepayment Reserve Account will be created within the Reserve Fund and held by the Trustee for the benefit of the Bonds. The Trustee will transfer funds from the Pledged Revenue Fund to the Prepayment Reserve Account on a semi-annual basis to accumulate and maintain on deposit therein an amount equal to the Prepayment Reserve Requirement. The Prepayment Reserve Requirement is an amount equal to 1.5% of the principal amount of the then Outstanding Bonds. The Town has allocated 0.20% of the interest rate component of the Annual Installments for such purpose until such time as the Prepayment Reserve Account contains the full amount of the Prepayment Reserve Requirement. Once the Prepayment Reserve Account contains the full amount of the Prepayment Reserve Requirement, such 0.20% of the interest rate component of the Annual Installments shall be allocated first to the Delinquency Reserve Account as described below if the Delinquency Reserve Account contains less than the Delinquency Reserve Requirement, or, if the Delinquency Reserve Account contains the Delinquency Reserve Requirement, then to the Redemption Fund to redeem Bonds. At any time the amount on deposit in the Prepayment Reserve Account is less than Prepayment Reserve Requirement, the Trustee shall resume depositing such 0.20% into the Prepayment Reserve Account until the Prepayment Reserve Requirement has accumulated in the Prepayment Reserve Account. See "APPENDIX A — FORM OF INDENTURE" and "APPENDIX B — SERVICE AND ASSESSMENT PLAN." Money deposited in the Prepayment Reserve Account will be used and withdrawn by the Trustee for the purpose of making transfers to the Bond Fund, pursuant to, and at the times specified in, the Indenture to pay a portion of the accrued interest on Bonds being redeemed pursuant to an extraordinary optional redemption from Prepayments. The amount to be transferred shall be an amount, for each Prepayment, equal to the amount of any shortfall, after transfers from the Reserve Account of the Reserve Fund as described above and application of investment earnings on the Prepayment toward payment of accrued interest, in funds necessary to pay the principal amount plus accrued interest on such Bonds to be redeemed as a result of the Prepayment. Whenever, on any Interest Payment Date, or on any other date at the written request of the Town Representative, the value of cash and Value of Investment Securities on deposit in the Prepayment Reserve Account exceeds the Prepayment Reserve Requirement, the Trustee shall provide written notice to the Town of the amount of the excess, and the Trustee shall transfer such excess to the Pledged Revenue Fund. Delinquency Reserve Account of the Reserve Fund Pursuant to the Indenture, a Delinquency Reserve Account will be created within the Reserve Fund and held by the Trustee for the benefit of the Bonds. The Trustee will transfer funds from the Pledged Revenue Fund to the Delinquency Reserve Account on a semi-annual basis to accumulate and maintain on deposit therein an amount equal to the Delinquency Reserve Requirement. The Delinquency Reserve Requirement is an amount equal to 4% of the principal amount of the then Outstanding Bonds. The Town has allocated 0.30% of the interest rate component of the Annual Installments for such purpose. In addition, when the Prepayment Reserve Account contains the full amount of the Prepayment Reserve Requirement as described above, the Town will allocate an additional 0.20% of the interest rate component to the Delinquency Reserve Account for the purpose of meeting the Delinquency Reserve Requirement. Once the Delinquency Reserve Requirement has been accumulated in the Delinquency Reserve Account, any amounts in excess of the Delinquency Reserve Requirement in the Delinquency Reserve Account shall be transferred by the Trustee to the Redemption Fund to redeem Bonds; provided, however, that at any time the amount on deposit in the Delinquency Reserve Account is less than Delinquency Reserve Requirement, the Trustee shall resume depositing such 0.30% into the Delinquency Reserve Account until the Delinquency Reserve Requirement has accumulated in the Delinquency Reserve Account. See "APPENDIX A — FORM OF INDENTURE" and "APPENDIX B — SERVICE AND ASSESSMENT PLAN." Res 14-45 Exhibit Whenever, on any Interest Payment Date, or on any other date at the written request of the Town Representative, the amount in the Delinquency Reserve Account exceeds the Delinquency Reserve Requirement, the Trustee shall transfer such excess to the Pledged Revenue Fund to redeem Bonds. Use of Reserve Accounts to Pay Debt Service If, on any Interest Payment Date, the amount on deposit in the Bond Fund is insufficient to pay the debt service on the Bonds Similarly Secured due on such date, the Trustee shall transfer first from the Delinquency Reserve Account of the Reserve Fund, second from the Reserve Account of the Reserve Fund and third from the Prepayment Reserve Account to the Bond Fund the amounts necessary to cure such deficiency. Administrative Fund is Not Security for the Bonds The Town has created under the Indenture an Administrative Fund held by the Trustee. Upon receipt, the Town shall deposit or cause to be deposited to the Administrative Fund the portion of the Assessments and Annual Installments allocated to the payment of Administrative Expenses and Delinquent Collection Costs, as set forth in the Service and Assessment Plan. Monies in the Administrative Fund shall be held by the Trustee separate and apart from the other Funds created and administered under the Indenture and may be used as directed by Town Order solely for the purposes set forth in the Service and Assessment Plan, including payment of Administrative Expenses and Delinquent Collection Costs. See "APPENDIX B — SERVICE AND ASSESSMENT PLAN." The Administrative Fund is not part of the Trust Estate and does not constitute security for the Bonds. Defeasance All Outstanding Bonds shall prior to the Stated Maturity or redemption date thereof be deemed to have been paid and to no longer be deemed Outstanding within the meaning of the Indenture ("Defeased Debt"), when payment of the principal of, premium, if any, on such Defeased Debt, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, upon redemption, or otherwise), either (1) shall have been made in accordance with the terms thereof, or (2) shall have been provided by irrevocably depositing with the Trustee, in trust, and irrevocably set aside exclusively for such payment, (A) money sufficient to make such payment or (B) Defeasance Securities, certified by an independent public accounting firm of national reputation to mature as to principal and interest in such amount and at such times as will insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation, and expenses of the Trustee pertaining to the Bonds with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. Neither Defeasance Securities nor such moneys deposited with the Trustee nor principal or interest payments on any such Defeasance Securities shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of and interest on the Bonds. Any cash received from such principal of and interest on such Defeasance Securities deposited with the Trustee, if not then needed for such purpose, shall be reinvested in Defeasance Securities as directed by the Town maturing at times and in amounts sufficient to pay when due the principal of and interest on the Bonds on and prior to such redemption date or maturity date thereof, as the case may be. Any payment for Defeasance Securities purchased for the purpose of reinvesting cash as aforesaid shall be made only against delivery of such Defeasance Securities. Furthermore, all rights of the Town to initiate proceedings to call the Defeased Debt for redemption or take any other action amending the terms of the Defeased Debt are extinguished; provided, however, that the right to call the Bonds for redemption is not extinguished if the Town: (i) in the proceedings providing for such defeasance, expressly reserves the right to call the Defeased Debt for redemption; (ii) gives notice of the reservation of that right to the owners of the Defeased Debt immediately following the defeasance; (iii) directs that notice of the reservation be included in any defeasance or redemption notices that it authorizes; and (iv) at or prior to the time of the redemption, satisfies the conditions of the preceding paragraph with respect to such Defeased Debt as though it was being defeased at the time of the exercise of the option to redeem the Defeased Debt, after taking the redemption into account in determining the sufficient of the provisions made for the payment of the Defeased Debt. 10 Res 14-45 Exhibit "Defeasance Securities" means Investment Securities then authorized by applicable law for the investment of funds to defease public securities. "Investment Securities" means those authorized investments described in the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended, which are, at the time made, included in and authorized by the Town's official investment policy as approved by the Town Council from time to time. Under current State law, Investment Securities that are authorized for the investment of funds to defease public securities are (a) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America (b) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the Town adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, (c) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the Town adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. There is no assurance that the current law will not be changed in a manner which would permit investments other than those described above to be made with amounts deposited to defease the Bonds. Because the Indenture does not contractually limit such investments, Owners may be deemed to have consented to defeasance with such other investments, notwithstanding the fact that such investments may not be of the same investment quality as those currently permitted under State law. There is no assurance that the ratings for U.S. Treasury securities used as Defeasance Securities or that for any other Defeasance Security will be maintained at any particular rating category. Events of Default Each of the following occurrences or events constitutes an "Event of Default" under the Indenture: (i) the failure of the Town to deposit the Pledged Revenues to the Pledged Revenue Fund; (ii) the failure of the Town to enforce the collection of the Assessments including the prosecution of foreclosure proceedings; and (iii) default in the performance or observance of any covenant, agreement or obligation of the Town under the Indenture and the continuation thereof for a period of ninety (90) days after written notice specifying such default and requiring same to be remedied shall have been given to the Town by the Trustee, which may give such notice in its discretion and shall give such notice at the written request of the Owners of not less than 51% in principal amount of the Bonds Similarly Secured then Outstanding; provided, however, if the default stated in the notice is capable of cure but cannot reasonably be cured within the applicable period, the Town shall be entitled to a further extension of time reasonably necessary to remedy such default so long as corrective action is instituted by the Town within the applicable period and is diligently pursued until such failure is corrected, but in no event for a period of time of more than one hundred eighty (180) days after such notice. Remedies in Event of Default Upon the happening and continuance of any Event of Default, then and in every such case the Trustee may proceed, and upon the written request of the Owners not less than 51% in principal amount of the Bonds Similarly Secured then Outstanding under the Indenture shall proceed to protect and enforce the rights of the Owners under the Indenture by action seeking mandamus or by other suit, action, or special proceeding in equity or at law in any court of competent jurisdiction for any relief to the extent permitted by Applicable Laws including, but not limited to, the specific performance of any covenant or agreement contained in the Indenture, or injunction; provided, however, that no action for money damages against the Town may be sought or will be permitted. THE PRINCIPAL OF THE BONDS SHALL NOT BE SUBJECT TO ACCELERATION UNDER ANY CIRCUMSTANCES. 11 Res 14-45 Exhibit If the assets of the Trust Estate are sufficient to pay all amounts due with respect to Outstanding Bonds Similarly Secured, in the selection of Trust Estate assets to be used in the payment of Bonds Similarly Secured due in an Event of Default, the Town shall determine, in its absolute discretion, and shall 'instruct the Trustee by Town Order, which Trust Estate assets shall be applied to such payment and shall not be liable to any Owner or other Person by reason of such selection and application. In the event that the Town shall fail to deliver to the Trustee such Town Order, the Trustee shall select and liquidate or sell Trust Estate assets as provided in the following paragraph, and shall not be liable to any Owner, or other Person, or the Town by reason of such selection, liquidation or sale. Whenever moneys are to be applied pursuant to the Indenture following an Event of Default, irrespective of and whether other remedies authorized under the Indenture shall have been pursued in whole or in part, the Trustee may cause any or all of the assets of the Trust Estate, including Investment Securities, to be sold. The Trustee may so sell the assets of the Trust Estate and all right, title, interest, claim and demand thereto and the right of redemption thereof, in one or more parts, at any such place or places, and at such time or times and upon such notice and terms as the Trustee may deem appropriate and as may be required by law and apply the proceeds thereof in accordance with the provisions of the Indenture. Upon such sale, the Trustee may make and deliver to the purchaser or purchasers a good and sufficient assignment or conveyance for the same, which sale shall be a perpetual bar both at law and in equity against the Town and all other Persons claiming such properties. No purchaser at any sale shall be bound to see to the application of the purchase money proceeds thereof or to inquire as to the authorization, necessity, expediency, or regularity of any such sale. Nevertheless, if so requested by the Trustee, the Town shall ratify and confirm any sale or sales by executing and delivering to the Trustee or to such purchaser or purchasers all such instruments as may be necessary or, in the judgment of the Trustee, proper for the purpose which may be designated in such request. Restriction on Owner's Actions No Owner shall have any right to institute any action, suit or proceeding at law or in equity for the enforcement of the Indenture or for the execution of any trust thereof or any other remedy thereunder, unless (i) a default has occurred and is continuing of which the Trustee has been notified in writing or of which it is deemed to have notice, (ii) such default has become an Event of Default and the Owners of 51% of the aggregate principal amount of the Bonds Similarly Secured then Outstanding have made written request to the Trustee and offered it reasonable opportunity either to proceed to exercise the powers granted or to institute such action, suit or proceeding in its own name, (iii) the Owners have furnished to the Trustee indemnity as provided in the Indenture, (iv) the Trustee has for sixty (60) days after such notice failed or refused to exercise the powers granted, or to institute such action, suit, or proceeding in its own name, (v) no direction inconsistent with such written request has been given to the Trustee during such 60 -day period by the Owners of 51% of the aggregate principal amount of the Bonds Similarly Secured then Outstanding, and (vi) notice of such action, suit, or proceeding is given to the Trustee; however, no one or more Owners of the Bonds Similarly Secured shall have any right in any manner whatsoever to affect, disturb, or prejudice the Indenture by its, his or their action or to enforce any right thereunder except in the manner provided in the Indenture, and that all proceedings at law or in equity shall be instituted and maintained in the manner provided in the Indenture and for the equal benefit of the Owners of all Bonds Similarly Secured then Outstanding. The notification, request and furnishing of indemnity shall, at the option of the Trustee, be conditions precedent to the execution of the powers and trusts of the Indenture and to any action or cause of action for the enforcement of the Indenture or for any other remedy thereunder. Subject to provisions of the Indenture with respect to certain liabilities of the Town, nothing in the Indenture shall affect or impair the right of any Owner to enforce, by action at law, payment of any Bond at and after the maturity thereof, or on the date fixed for redemption or the obligation of the Town to pay each Bond issued thereunder to the respective Owners thereof at the time and place, from the source and in the manner expressed therein and in the Bonds. In case the Trustee or any Owners of Bonds Similarly Secured shall have proceeded to enforce any right under the Indenture and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or any Owners of Bonds Similarly Secured, then and in every such case the Town, the Trustee and the Owners of Bonds Similarly Secured shall be restored to their former positions and 12 Res 14-45 Exhibit rights thereunder, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken. Application of Revenues and Other Moneys After Event of Default All moneys, securities, funds and Pledged Revenues and the income therefrom received by the Trustee pursuant to any right given or action taken under the provisions of the Indenture with respect to Events of Default shall, after payment of the cost and expenses of the proceedings resulting in the collection of such amounts, the expenses (including its counsel), liabilities, and advances incurred or made by the Trustee and the fees of the Trustee in carrying out the Indenture, be applied by the Trustee, on behalf of the Town, to the payment of interest and principal or Redemption Price then due on Bonds Similarly Secured, as follows: FIRST: To the payment to the Owners entitled thereto all installments of interest then due in the direct order of maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment, then to the payment thereof ratably, according to the amounts due on such installment, to the Owners entitled thereto, without any discrimination or preference; and SECOND: To the payment to the Owners entitled thereto of the unpaid principal of Outstanding Bonds Similarly Secured, or Redemption Price of any Bond Similarly Secured which shall have become due, whether at maturity or by call for redemption, in the direct order of their due dates and, if the amounts available shall not be sufficient to pay in full all the Bonds Similarly Secured due on any date, then to the payment thereof ratably, according to the amounts of principal due and to the Owners entitled thereto, without any discrimination or preference. Within thirty (30) days of receipt of such good and available funds, the Trustee may fix a record date and a payment date for any payment to be made to Owners of Bonds Similarly Secured. In the event that funds are not adequate to cure an Event of Default, the available funds shall be allocated to the Bonds Similarly Secured that are Outstanding in proportion to the quantity of Bond Similarly Secured that are currently due and in default under the terms of the Indenture. The restoration of the Town to its prior position after any and all defaults have been cured, as provided above, shall not extend to or affect any subsequent default under the Indenture or impair any right consequent thereon. Investment or Deposit of Funds Money in any Fund or Account established pursuant to the Indenture (other than the Reserve Account) will be invested by the Trustee as directed by the Town pursuant to a Town Order filed with the Trustee in Investment Securities; provided that all such deposits and investments shall be made in such manner that the money required to be expended from any Fund or Account will be available at the proper time or times. Money in the Reserve Account shall be invested in such Investment Securities as directed by the Town pursuant to a Town Order filed with the Trustee, provided that the final maturity of any individual Investment Security shall not exceed 270 days and the average weighted maturity of any investment pool or no-load money market mutual fund shall not exceed 90 days. Obligations purchased as an investment of moneys in any Fund or Account shall be deemed to be part of such Fund or Account, subject, however, to the requirements of the Indenture for transfer of interest earnings and profits resulting from investment of amounts in Funds and Accounts. Whenever in the Indenture any moneys are required to be transferred by the Town to the Trustee, such transfer may be accomplished by transferring a like amount of Investment Securities. Additional Bonds The Bonds will pay for a portion of the costs of the Improvement Project A Improvements. The Town expects, but is under no obligation, to issue (i) Additional Bonds on parity with the Bonds in 2017 or thereafter to finance its payment obligations under the Reimbursement Agreement with respect to the balance of the costs of 13 Res 14-45 Exhibit Improvement Project A Improvements, which is anticipated to consist primarily of improvements within Improvement Area #3 (East Residential) and (ii) bonds secured by assessments against only Improvement Area #1 Assessed Parcels in 2017 or thereafter to finance its payment obligations under the Reimbursement Agreement with respect to the costs of the Improvement Project B Improvements within Improvement Area #1 (the Mixed -Use Core) (such bonds the "Improvement Project B Bonds"). The total aggregate principal amount of Bonds, Additional Bonds, and Improvement Project B Bonds issued will not exceed $32,000,000. In the Assessment Ordinance, the Town will levy the (i) Assessments against all Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels to pay the costs of the Improvement Project A Improvements, and (ii) separate assessments against only the Improvement Area #1 Assessed Parcels to pay the costs of the Improvement Project B Improvements. Any Additional Bonds issued to finance the costs of Improvement Project A Improvements will be parity obligations with the Bonds. Because the Improvement Project B Bonds will be secured by separate assessments levied against the Improvement Area #1 Assessed Parcels only, such bonds will not constitute "Additional Bonds" under the Indenture. However, the issuance of such Improvement Project B Bonds is subject to satisfaction of certain requirements under the Indenture as described below under "Improvement Project B Bonds for Mixed -Use Core." Additional Bonds. The Town reserves the right to issue Additional Bonds for Improvement Project A Improvements for any purpose permitted by the Act and in accordance with the conditions set forth below: A Town Representative shall certify that the Town is not in default in the performance and observance of any of the terms, provisions and conditions applicable to it contained in the Indenture. 2. The Developer, through an authorized representative, shall certify that: a. It is not in default in the performance and observance of any of the terms, provisions and conditions applicable to it contained in the Financing Agreement; b. At least 75% of the remaining residential lots within Improvement Area #3 (East Residential) to be financed are under contract with merchant homebuilders unaffiliated with the Developer; c. Construction has commenced or been completed on at least 33% of the single-family homes and villas located within Improvement Area #2 (West Residential); d. The appraised value of the Improvement Area #1, Improvement Area #2, and Improvement Area #3 Assessed Parcels, assuming completion of all Improvement Project A Improvements, is equal to at least three (3) times the principal amount of all outstanding Bonds Similarly Secured, taking into account the Additional Bonds to be issued; and e. The appraised value allocated to each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel, and Improvement Area #3 Assessed Parcel is at least two and a half (2.5) times the portion of the principal amount of all Outstanding Bonds Similarly Secured, taking into account the Additional Bonds to be issued, that is allocated to each such Assessed Parcel. 3. The principal of and interest on the Additional Bonds must be scheduled to be paid or mature on March 1 or September 1, or both, of the years in which principal or interest is scheduled to be paid or mature with a final maturity date no more than thirty (30) years from their date of issuance. 4. There shall be deposited to the Reserve Fund an amount equal to the Reserve Fund Requirement taking into account the Outstanding Bonds Similarly Secured and the Additional Bonds then proposed to be issued. Improvement Project B Bonds for Mixed -Use Core. The Town reserves the right to issue Improvement Project B Bonds for any purpose permitted by the Act and in accordance with the conditions set forth below: 14 Res 14-45 Exhibit A Town Representative shall certify that the Town is not in default in the performance and observance of any of the terms, provisions and conditions applicable to it contained in the Indenture. 2. The Developer, through an authorized representative, shall certify that: a. At least one major parking facility of at least 250 spaces has been constructed within Improvement Area #1 (Mixed -Use Core); b. Of the approximately 1.1 million square feet of building development planned for Improvement Area #1 (Mixed -Use Core), at least 350,000 square feet of building development has been completed; 3. The Developer shall provide the Town with a certificate or report from an independent certified appraiser or appraisal firm that the appraised value of the Improvement Area #1 Assessed Parcels, assuming completion of the Improvement Project A Improvements and the Improvement Project B Improvements, is equal to at least four (4) times the principal amount of such Improvement Project B Bonds. 4. The principal of and interest on the Improvement Project B Bonds must be scheduled to be paid or mature on March 1 or September 1, or both, of the years in which principal or interest is scheduled to be paid or mature with a final maturity date no more than thirty (30) years from their date of issuance. 5. There shall be deposited to the reserve fund for the Improvement Project B Bonds an amount equal to the reserve fund requirement for the Improvement Project B Bonds. In addition, the Town has reserved the right to issue bonds secured by and payable from Pledged Revenues so long as such pledge is subordinate to the pledge of Pledged Revenues securing payment of the Bonds. SOURCES AND USES OF FUNDS The table that follows summarizes the expected sources and uses of proceeds of the Bonds: Sources of Funds: Principal Amount $ Total Sources Use of Funds: Deposit to Improvement Account of Project Fund $ Deposit to Capitalized Interest Account of Bond Fund Deposit to Reserve Account of Reserve Fund Costs of Issuance(i) Total Uses (') Includes Underwriter's discount, structuring fee and costs to create the District. 15 Res 14-45 Exhibit DEBT SERVICE REQUIREMENTS The following table sets forth the debt service requirements for the Bonds: Year Ending (September 30) Principal 2015 $ --- 2016 --- 2017 275,000 2018 300,000 2019 325,000 2020 350,000 2021 375,000 2022 400,000 2023 425,000 2024 450,000 2025 500,000 2026 525,000 2027 575,000 2028 600,000 2029 650,000 2030 700,000 2031 750,000 2032 825,000 2033 875,000 2034 950,000 2035 1,000,000 2036 1,075,000 2037 1,175,000 2038 1,250,000 2039 1,350,000 2040 1,450,000 2041 1,550,000 2042 1,675,000 2043 1,800,000 2044 1,925,000 2045 2,075,000 Total $26,175,000 *Totals may not add due to rounding. lai Interest* Total* $ Res 14-45 Exhibit OVERLAPPING TAXES AND DEBT The land within the District has been, and is expected to continue to be, subject to taxes and/or assessments imposed by governmental entities other than the Town. Such taxes are payable in addition to the Assessments. The Town, Tarrant County, the Tarrant County College District, the Tarrant County Hospital District, Trophy Club Municipal Utility District #1 and either Carroll Independent School District or Northwest Independent School District may each levy ad valorem taxes upon land in the District for payment of debt incurred by such governmental entities and/or for payment of maintenance and operations expenses. The Town has no control over the level of ad valorem taxes or special assessments levied by such other taxing authorities. The following table reflects the overlapping ad valorem tax rates currently levied on property located in the District. Taxing Entity Tarrant County Town Tarrant County College District Tarrant County Hospital District Trophy Club MUD #1(') Carroll Independent School District(2) Total Ad Valorem Tax Rate* Fiscal Year Ending 9/30/2014 $0.264000 0.156340 0.149500 0.227897 0.133390 1.400000 $2.331127 * Per $100 taxable appraised value as of 9/30/2014. The District is in a dual water and wastewater service zone with the Town and Trophy Club MUD #1. The Development will be serviced by the Town, but is within the boundaries of Trophy Club MUD #1 and is subject to taxation by Trophy Club MUD #1. (2) Approximately 14 acres within the District are located within the Northwest Independent School District ("Northwest ISD"). The most recently adopted ad valorem tax rate for Northwest ISD was $1.45250 per $100 taxable appraised value, for a total overlapping tax rate within Northwest ISD of $2.383627. Source: Tarrant Appraisal District As noted above, the District includes territory located in other governmental entities that may issue or incur debt secured by the levy and collection of ad valorem taxes. Set forth below is an overlapping debt table showing the outstanding indebtedness payable from ad valorem taxes with respect to property within the District, as of September 30, 2014, and Town debt secured by ad valorem taxes and the Assessments: (') Based upon ratio of acreage of the District to total acreage of the taxing entity. (Z) The Town is currently using sales tax revenues in lieu of ad valorem taxes to pay debt service on all of its debt to which ad valorem taxes are pledged, except for its Combination Tax and Revenue Certificates of Obligation, Series 2011, which had an outstanding balance of $1,824,000 as of September 30, 2014. (3) The District is in a dual water and wastewater service zone with the Town and Trophy Club MUD #1. The Development is will be serviced by the Town, but is within the boundaries of Trophy Club MUD #1 and is subject to taxation by Trophy Club MUD #1. (4) Approximately 14 acres within the District are located within Northwest ISD. As of September 30,2014, Northwest ISD had $737,438,319 principal amount of debt outstanding. Source: Municipal Advisory Council of Texas (taxes) and the Town (Assessment) 17 Res 14-45 Exhibit Direct and Estimated Gross Debt Estimated % Overlapping Taxing or AssessingEntity Outstanding Applicable(l) Debt The Town (Assessments) $ 26,175,000* 100.00% $ 26,175,000* The Town (ad valorem taxes) (2) 29,304,000 100.00 29,304,000 Tarrant County 317,820,000 0.78 2,478,996 Tarrant County College District 7,935,000 0.78 61,893 Tarrant County Hospital District 24,425,000 0.78 190,515 Trophy Club MUD #1(3) 11,285,000 18.76 2,117,066 Carroll Independent School District(4) 226,024,791 5.26 11,888,904 $637,203,791 $72,216,374 (') Based upon ratio of acreage of the District to total acreage of the taxing entity. (Z) The Town is currently using sales tax revenues in lieu of ad valorem taxes to pay debt service on all of its debt to which ad valorem taxes are pledged, except for its Combination Tax and Revenue Certificates of Obligation, Series 2011, which had an outstanding balance of $1,824,000 as of September 30, 2014. (3) The District is in a dual water and wastewater service zone with the Town and Trophy Club MUD #1. The Development is will be serviced by the Town, but is within the boundaries of Trophy Club MUD #1 and is subject to taxation by Trophy Club MUD #1. (4) Approximately 14 acres within the District are located within Northwest ISD. As of September 30,2014, Northwest ISD had $737,438,319 principal amount of debt outstanding. Source: Municipal Advisory Council of Texas (taxes) and the Town (Assessment) 17 Res 14-45 Exhibit In addition to the Assessments described above under "SECURITY FOR THE BONDS; THE INDENTURE," the Developer anticipates that each property owner will pay a property owner's association fee to a homeowner's association. Taxation of Property Identified for Agricultural Use If land is devoted principally to agricultural use, the landowner can apply for an agricultural valuation on the property and pay ad valorem taxes based on the land's agricultural value. Approximately 27.75 acres within the District is currently subject to an agricultural valuation with respect to its ad valorem taxes. Agricultural use includes production of crops or livestock. It also can include leaving the land idle for a government program or for normal crop or livestock rotation. If land qualified for an agricultural valuation and the land use changes to a non-agricultural use, "rollback taxes" are assessed for each of the previous 5 years in which the land received the lower agricultural valuation. The rollback tax is the difference between taxes paid on land's agricultural value and the taxes that the land owner would have paid if the land had been taxed on a higher market value plus interest charged for each year from the date on which taxes would have been due. If the land use changes to a non-agricultural use on only a portion of a larger tract, the land owner can fence off the remaining land and maintain the agricultural valuation on the remaining land. In this scenario, the land owner would only be responsible for rollback taxes on that portion of the land where use changed and not the entire tract. It is expected that rollback taxes will be paid by the Developer or purchasers from the Developer during development of the District and prior to purchase of parcels or lots by homeowners. The Developer expects that the agricultural use valuations within the District will be terminated in 2015, affecting tax rolls beginning in 2015. ASSESSMENT PROCEDURES General As required by applicable law, when the Town determines to defray a portion of the costs of Improvement Project A Improvements through the levy of the Assessments, it must adopt a resolution generally describing the Improvement Project A Improvements and the land within Improvement Area #1, Improvement Area #2 and Improvement Area #3 of the District to be subject to the Assessments to pay the cost thereof. The Town has caused an assessment roll to be prepared (the "Assessment Roll"), which Assessment Roll shows the land within Improvement Area #1, Improvement Area #2 and Improvement Area #3 to be assessed, the amount of the benefit to and the Assessment against each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel and the number of Annual Installments into which the Assessment is divided. The Assessment Roll was filed with the Town Secretary and is available for public inspection. Statutory notice was given to the owners of the property to be assessed and a public hearing was conducted to hear testimony from affected property owners as to the propriety and advisability of undertaking the Improvement Project A Improvements and funding a portion of the same with the Assessments. The Town expects to proceed to levy the Assessments and adopt the Assessment Ordinance immediately prior to adopting the Bond Ordinance. After such adoption, the Assessment Lien will become a legal, valid and binding lien upon the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels. Under the PID Act, the costs of Improvement Project A Improvements may be assessed by the Town against the assessable property in Improvement Area #1, Improvement Area #2 and Improvement Area #3 so long as the special benefit conferred upon the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels by the Improvement Project A Improvements equals or exceeds the Assessments. The costs of Improvement Project A Improvements may be assessed using any methodology that results in the imposition of equal shares of cost on assessed property similarly benefited. The allocation of benefits and assessments to the benefitted land within Improvement Area #1, Improvement Area #2 and Improvement Area #3 is presented in the Service and Assessment Plan, which should be read in its entirety. See "APPENDIX B — SERVICE AND ASSESSMENT PLAN." 18 Res 14-45 Exhibit Assessment Methodology The Service and Assessment Plan describes the special benefit received by the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels as a result of Improvement Project A Improvements, provides the basis and justification for the determination that such special benefit exceeds the Assessments being levied, and establishes the methodology by which the Town allocates the special benefit of Improvement Project A Improvements to the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels in a manner that results in equal shares of costs being apportioned to parcels similarly benefited. As described in the Service and Assessment Plan, a portion of the costs of Improvement Project A Improvements are being funded with proceeds of the Bonds, which are payable from and secured by Pledged Revenues, including Assessment Revenues. As set forth in the Service and Assessment Plan, the benefits received by Improvement Project A Improvements are currently spread among the Assessed Parcels within each Improvement Area based on the estimated Equivalent Units as calculated for each Land Use Class in each Improvement Area. As the existing parcels are subsequently divided, the Assessments will be further apportioned pro rata to the resulting parcels based on the Equivalent Units of each newly created parcel. For residential lots, when final residential building sites are platted, the Assessments will be apportioned proportionately among each Land Use Class based on the ratio of the Equivalent Unit applicable to each Land Use Class at the time lots are platted to the total Equivalent Units of all lots in the platted parcel, as determined by the Administrator and confirmed by the Town Council. "Equivalent Units" means, as to any parcel within each Improvement Area, the number of units by lot type expected to be built on the parcel multiplied by the factors shown below: Assessment Part A per Unit The Town has determined that such method of allocation will result in the imposition of equal shares of the Assessments on parcels similarly situated. The Assessments and the interest thereon are expected to be paid in Annual Installments as described above. The determination by the Town of the assessment methodology set forth in the Service and Assessment Plan is the result of the discretionary exercise by the Town Council of its legislative authority and governmental powers and is conclusive and binding on the Developer, all other current owners of 19 Res 14-45 Exhibit Assessment Planned Part A per No. of Equivalent Equivalent Total Assessment Type Units Unit Unit Factor Assessment Part A per Unit Part A Improvement Area #1 Land Use Class 1 38 $58,797.94 1.00 $58,797.94 per dwelling unit $2,234,321.65 Land Use Class 2 71 $58,797.94 0.62 $36,454.72 per dwelling unit $2,588,285.24 Land Use Class 3 6 $58,797.94 0.60 $35,278.76 per dwelling unit $211,672.58 Land Use Class 10 372.10 $58,797.94 0.22 $12,935.55 per 1,000 Sq. Ft $4,813,303.88 Land Use Class 11 266.10 $58,797.94 0.20 $11,759.59 per 1,000 Sq. Ft $3,129,226.27 Land Use Class 12 255.50 $58,797.94 0.21 $12,347.57 per 1,000 Sq. Ft $3,154,803.37 Land Use Class 13 264.60 $58,797.94 0.19 $11,171.61 per 1,000 Sq. Ft $2,956,007.55 Subtotal: Improvement Area #1 $19,087,620.54 Improvement Area #2 Land Use Class 4 42 $63,349.00 1.00 $63,349.00 per dwelling unit $2,660,658.15 Land Use Class 5 16 $63,349.00 0.68 $43,077.32 per dwelling unit $689,237.16 Land Use Class 6 69 $63,349.00 0.52 $32,941.48 per dwelling unit $2,272,962.25 Subtotal: Improvement Area #2 $5,622,857.55 Improvement Area #3 Land Use Class 7 21 $86,189.26 1.00 $86,189.26 per dwelling unit $1,809,974.49 Land Use Class 8 23 $86,189.26 0.68 $58,608.70 per dwelling unit $1,348,000.05 Land Use Class 9 36 $86,189.26 0.52 $47,404.09 per dwelling unit $1,706,547.37 Subtotal: Improvement Area #3 $4,864,521.90 Grand Total Assessment Part A $29,575,000.00 The Town has determined that such method of allocation will result in the imposition of equal shares of the Assessments on parcels similarly situated. The Assessments and the interest thereon are expected to be paid in Annual Installments as described above. The determination by the Town of the assessment methodology set forth in the Service and Assessment Plan is the result of the discretionary exercise by the Town Council of its legislative authority and governmental powers and is conclusive and binding on the Developer, all other current owners of 19 Res 14-45 Exhibit property within the District and all future owners and developers within the District. See "APPENDIX B — SERVICE AND ASSESSMENT PLAN." Collection and Enforcement of Assessments Under the PID Act, the Annual Installments may be collected in the same manner and at the same time as regular ad valorem taxes of the Town. The Assessments may be enforced by the Town in the same manner that an ad valorem tax lien against real property is enforced. Delinquent installments of the Assessments incur interest, penalties and attorney's fees in the same manner as delinquent ad valorem taxes. Under the PID Act, the Assessment Lien is a first and prior lien against the property assessed, superior to all other liens and claims except liens or claims for State, county, school district or municipal ad valorem taxes. If homestead rights are properly claimed by a property owner prior to the attachment of the Assessment Lien, the Assessment Lien may not be foreclosed upon; however, any unpaid Assessment or Annual Installment will be an unsecured personal liability of such property owner. As of the date of adoption of the Assessment Ordinance, no such homestead rights will have been claimed on property within Improvement Area #1, Improvement Area #2 or Improvement Area #3. For additional information, see `BONDHOLDERS' RISKS — Assessment Limitations" herein. The Town will covenant in the Indenture to collect, or cause to be collected, Assessments as provided in the Assessment Ordinance. No less frequently than annually, the Town staff shall prepare, and the Town Council shall approve, an Annual Service Plan Update to allow for the billing and collection of Annual Installments. Each Annual Service Plan Update shall include an updated Assessment Roll for Improvement Area #1, Improvement Area #2 and Improvement Area #3 and a calculation of the Annual Installment for each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel. Administrative Expenses shall be allocated among Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels in proportion to the amount of the Annual Installments for the Improvement Area 41 Assessed Parcels, Improvement Area 42 Assessed Parcels and Improvement Area 43 Assessed Parcels. The Town will covenant, agree and warrant in the Indenture that, for so long as any Bonds are Outstanding, it will take and pursue all actions permissible under Applicable Laws to cause the Assessments to be collected and the liens thereof enforced continuously, in the manner and to the maximum extent permitted by Applicable Laws, and to cause no reduction, abatement or exemption in the Assessments. To the extent permitted by law, notice of the Annual Installments will be sent by, or on behalf of, the Town to the affected property owners on the same statement or such other mechanism that is used by the Town, so that such Annual Installments are collected simultaneously with ad valorem taxes and shall be subject to the same penalties, procedures, and foreclosure sale in case of delinquencies as are provided for ad valorem taxes of the Town. The Town will determine or cause to be determined, no later than February 15 of each year, whether or not any Annual Installment is delinquent and, if such delinquencies exist, the Town will order and cause to be commenced as soon as practicable any and all appropriate and legally permissible actions to obtain such Annual Installment, and any delinquent charges and interest thereon, including diligently prosecuting an action in district court to foreclose the currently delinquent Annual Installment. Notwithstanding the foregoing, the Town shall not be required under any circumstances to pay the delinquent Assessment or the purchase the corresponding Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel or Improvement Area #3 Assessed Parcel. The Town will implement the basic timeline and procedures for Assessment collections and pursuit of delinquencies set forth in Exhibit C of the Continuing Disclosure Agreement set forth in APPENDIX E-1 and to comply therewith to the extent that the Town reasonably determines that such compliance is the most appropriate timeline and procedures for enforcing the payment of delinquent Assessments. See "APPENDIX E — FORMS OF DISCLOSURE AGREEMENTS." A committee of not less than 25% of the Owners or Beneficial Owners may request a meeting with the Town Manager of the Town to discuss the Town's actions in pursuing the payment of any Assessment delinquencies G1 Res 14-45 Exhibit in the event that (i) on or after March 1 in any year, based on Assessment Revenues collected to such date and the available money on deposit in the various funds and accounts under the Indenture, money in the Reserve Account of the Reserve Fund has been or will be required to be used to pay all or a portion of the principal or interest payments to be made on the Bonds during such year, or (ii) in any year, the aggregate amount of delinquent payments of Assessments is more than five percent (5%) of aggregate amount of Assessments due in such year. The Town shall not be required under any circumstances to expend any funds for Delinquent Collection Costs or Administrative Expenses in connection with its covenants and agreements under the Indenture or otherwise other than funds on deposit in the Administrative Fund. Annual Installments will be paid to the Town or its agent. Annual Installments are due on October 1 of each year, and become delinquent on February 1 of the following year. In the event that Assessments are not timely paid, there are penalties and interest as set forth below: Date Payment Cumulative Cumulative Received Penalty Interest Total February 6% 1% 7% March 7% 2% 9% April 8% 3% 11% May 9% 4% 13% June 10% 5% 15% July 12% 6% 18% After July, the penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent in July, an attorney's collection fee equal to 20% of the Annual Installment may be added to the total penalty and interest charge. In general, property subject to lien may be sold, in whole or in parcels, pursuant to court order to collect the amounts due. An automatic stay by creditors or other entities, including governmental units, could prevent governmental units from foreclosing on property and prevent liens for post- petition taxes from attaching to property and obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In most cases, post-petition Assessments are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court. Assessment Amounts Assessment Amounts. The maximum amounts of the Assessments have been established by the methodology described in the Service and Assessment Plan. The Assessments will be levied against the Improvement Area 41 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area 43 Assessed Parcels as indicated on the Assessment Roll. See "APPENDIX B — SERVICE AND ASSESSMENT PLAN" and "APPENDIX G — FINANCING AGREEMENT." Method of Apportionment of Assessments. For purposes of the Service and Assessment Plan, the Town Council has determined that within each Improvement Area, the Assessments will initially be allocated among Assessed Parcels based on the ratio of the Equivalent Units of each parcel to the total Equivalent Units within each Improvement Area. As the existing parcels are subsequently divided, the Assessments will be further apportioned based on the ratio of the Equivalent Units of the newly created parcels. See "ASSESSMENT PROCEDURES — Assessment Methodology" and "APPENDIX B — SERVICE AND ASSESSMENT PLAN." The total Assessments per Equivalent Unit in Improvement Area #1, Improvement Area #2 and Improvement Area #3 are $58,797.94, $63,349.00 and $86,189.26, respectively. The Assessment for each Assessed Parcel is calculated as the product of the total Assessment per Equivalent Unit multiplied by the applicable Equivalent Unit value for the Land Use Class to be developed on each Parcel. The Bonds are secured by a first lien on and pledge of Pledged Revenues, including the Assessment Revenues. See "SECURITY FOR THE BONDS; THE INDENTURE" and "APPENDIX B — SERVICE AND ASSESSMENT PLAN." 21 Res 14-45 Exhibit Prepayment of Assessments Pursuant to the PID Act and the Indenture, the owner of any property assessed may voluntarily prepay (a "Prepayment") all or part of any Assessment levied against any lot or parcel, together with accrued interest to the date of payment, at any time. Upon receipt of such Prepayment, such amounts will be deposited into the Pledged Revenue Fund and then transferred to the Redemption Fund and applied towards the redemption or payment of the Bonds. Amounts received at the time of a Prepayment which represent a payment of principal, interest, or penalties on a delinquent installment of an Assessment are not to be considered a Prepayment, but rather are to be treated as payment of regularly scheduled Assessments. Priority of Lien The Assessments or any reassessment, the expense of collection, and reasonable attorney's fees, if incurred, constitute a first and prior lien against the property assessed, superior to all other liens and claims except liens or claims for State, county, school district or municipality ad valorem taxes, and are a personal liability of and charge against the owners of the property regardless of whether the owners are named. The lien is effective from the date of the Assessment Ordinance until the Assessment is paid, and may be enforced by the Town in the same manner as an ad valorem tax levied against real property may be enforced by the Town. The owner of any Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel or Improvement Area #3 Assessed Parcel may pay the entire Assessment levied against such parcel, together with accrued interest to the date of payment, at any time. Foreclosure Proceedings In the event of delinquency in the payment of any Annual Installment, except for unpaid Assessments on homestead property (unless the lien associated with the assessment attached prior to the date the property became a homestead), the Town is empowered to order institution of an action in state district court to foreclose the lien of such delinquent Assessment. In such action the real property subject to the delinquent unpaid Assessment may be sold at judicial foreclosure sale for the amount of such delinquent installments, plus penalties and interest. If homestead rights are properly claimed by a property owner prior to the attachment of the Assessment Lien, the Assessment Lien may not be foreclosed upon; however, any unpaid Assessment or Annual Installment will be an unsecured personal liability of such property owner. Currently, all of the property within Improvement Area #1, Improvement Area #2 and Improvement Area #3 is owned by the Developer, which is not an entity entitled to claim homestead rights. See `BONDHOLDERS' RISKS — Assessment Limitations" and `BONDHOLDERS' RISKS — Agricultural Use Valuation and Redemption Rights." Any sale of property for nonpayment of an installment or installments of an Assessment will be subject to the lien established for remaining unpaid installments of the Assessment against such property and such property may again be sold at a judicial foreclosure sale if the purchaser thereof fails to make timely payment of the non - delinquent installments of the Assessments against such property as they become due and payable. Judicial foreclosure proceedings are not mandatory. In the event a foreclosure is necessary, there could be a delay in payments to owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the Town of the proceeds of the foreclosure sale. It is possible that no bid would be received at the foreclosure sale, and in such event there could be an additional delay in payment of the principal of and interest on Bonds or such payment may never be made in full. The Town is not required under any circumstance to pay the delinquent Assessment or purchase the corresponding Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel or Improvement Area #3 Assessed Parcel. The Town will covenant in the Indenture to take and pursue all actions permissible under Applicable Laws to cause the Assessments to be collected and the liens thereof enforced continuously, in the manner and to the maximum extent permitted by Applicable Laws, and to cause no reduction, abatement or exemption in the Assessments, provided that the Town is not required to expend any funds for collection and enforcement of Assessments other than funds on deposit in the Administrative Fund. See "APPENDIX A — FORM OF INDENTURE. " See also "APPENDIX E — FORMS OF DISCLOSURE AGREEMENTS" for a description of the expected timing of certain events with respect to collection of delinquent Assessments. 22 Res 14-45 Exhibit The Town will create the Delinquency Reserve Account under the Indenture and will fund such account from 0.30% of the interest rate component of Annual Installments, and additionally from 0.20% of the interest rate component of the Annual Installments at any time the Prepayment Reserve Account is fully funded, to offset possible delinquent payments. The Town will not be obligated to fund foreclosure proceedings out of any funds other than in the Administrative Fund. If Pledged Revenues are insufficient to pay foreclosure costs, the Owners of the Bonds may be required to pay amounts necessary to continue foreclosure proceedings. See "SECURITY FOR THE BONDS; THE INDENTURE — Delinquency Reserve Account of the Reserve Fund," "APPENDIX A — FORM OF INDENTURE" and "APPENDIX B — SERVICE AND ASSESSMENT PLAN." THE TOWN Background The Town of Westlake occupies approximately 7 square miles and is located in Denton and Tarrant Counties in the rapidly growing northern triangle of the Dallas -Fort Worth Metroplex. The Town combines a rural Texas atmosphere with the convenience of the Metroplex. The Town was incorporated in 1956 and operates as a Type A general law city under the laws of the State. The Town's 2010 census population was 992, a 379% increase since 2000. According to the 2010 census, the Town has an estimated annual median household income of $250,000. Westlake is home to many small independent businesses as well as several corporate campuses including the Deloitte University campus, a 750,000 square -foot learning and leadership development center. Other developments in Westlake include Solana, a high profile corporate campus which includes CoreLogic (formerly First American Real Estate Information Services Inc.), Fidelity Investments North Texas Campus, and TD Auto Finance (formerly Chrysler Financial Services) Westlake Campus. The Town owns and operates the Westlake Academy, the State's only municipal open -enrollment charter school. Westlake Academy serves Kindergarten thru 12th grade and is an International Baccalaureate World School offering the International Baccalaureate curriculum. Westlake Academy is governed by a six -member Board of Trustees. Members of the Board of Trustees serve concurrently as members of the Town Council. Town Government The current members of the Town Council and their respective expiration of terms of office are as follows: The principal administrators of the Town include the following: Name Tom Brymer Debbie Piper Kelly Edwards Boyle & Lowry LLP 23 Position Town Manager Finance Director Town Secretary Town Attorney Res 14-45 Exhibit Term Expires Council Member fh a Laura Wheat, Mayor 2016 Carol Langdon, Mayor Pro -Tem 2015 Alesa Belvedere 2016 Michael Barrett 2016 Wayne Stoltenberg 2015 Rick Rennhack 2015 The principal administrators of the Town include the following: Name Tom Brymer Debbie Piper Kelly Edwards Boyle & Lowry LLP 23 Position Town Manager Finance Director Town Secretary Town Attorney Res 14-45 Exhibit Major Employers The major employers in the Town are set forth in the table below. Employer Fidelity Investments First American/CoreLogic Wells Fargo Chrysler Financial/TD Auto Finance Deloitte Verizon Sabre JLL Facilities Marriott Solana Hotel Vaquero Club Town of Westlake/Westlake Academy Source: The Town General Business Employees Financial Services 5003 Business Information & Services 1790 Financial Services 580 Financial Services 479 Financial Services 478 Telephone Utility 312 Technology Holdings 186 Hotel 124 Golf Course 115 Government 107 THE DISTRICT The PID Act authorizes municipalities, such as the Town, to create public improvement districts within their boundaries or extraterritorial jurisdiction, and to impose assessments within the public improvement district to pay for certain public improvements. The District was created by resolution of the Town in accordance with the PID Act (the "Creation Resolution") for the purpose of, among others, funding the Improvement Project A Improvements. The District is not a separate political subdivision of the State and is governed by the Town Council. A map of the property within the District is included on page v hereof. Powers and Authority Pursuant to the PID Act, the Town may establish and create the District and undertake, or reimburse a developer for the costs of, public improvement projects that confer a special benefit on property located within the District, whether located within the Town limits or the Town's extraterritorial jurisdiction. The District is located entirely within the boundaries of the Town. The PID Act provides that the Town may levy and collect assessments on property in the District, payable in periodic installments based on the benefit conferred by a public improvement project, to pay all or part of its cost. Pursuant to the PID Act and the Creation Resolution, the Town has the power to undertake the acquisition, construction or improvement of Improvement Project A Improvements. See "THE IMPROVEMENT PROJECT A IMPROVEMENTS." Pursuant to the authority granted by the PID Act and the Creation Resolution, the Town has determined to undertake, or reimburse the Developer for the costs of, the construction, acquisition or purchase of certain roadway, water, wastewater, drainage, landscaping and public park improvements within and outside of the District comprising the Improvement Project A Improvements and to finance a portion of the costs thereof through the issuance of the Bonds. The Town has further determined to provide for the payment of debt service on the Bonds through the Pledged Revenues. See "ASSESSMENT PROCEDURES" and "APPENDIX B — SERVICE AND ASSESSMENT PLAN." THE IMPROVEMENT PROJECT A IMPROVEMENTS General The Improvement Project A Improvements consist of the construction, acquisition or purchase of certain roadway, water, wastewater, drainage, landscape and park improvements that benefit Improvement Area #1, Improvement Area #2 and Improvement Area #3, which encompasses the entire District. See "THE 24 Res 14-45 Exhibit DEVELOPMENT — Development Plans — Improvement Project A Improvements." A portion of the costs of the construction of Improvement Project A Improvements in the approximate amount of $18,009,400 will be funded with proceeds of the Bonds, with the remainder of the costs of Improvement Project A Improvements to be funded by the Developer and, pursuant to the Reimbursement Agreement, reimbursed to the Developer over time or through the issuance of Additional Bonds in 2017 or thereafter. See "PLAN OF DEVELOPMENT AND FINANCE — Financing of Public Improvements," "SECURITY FOR THE BONDS; THE INDENTURE — Additional Bonds" and "APPENDIX B — SERVICE AND ASSESSMENT PLAN." The Developer is responsible for ensuring that construction of Improvement Project A Improvements is completed and it or its designee will act as construction manager. The Appraisal (defined herein) estimates that the value of the property within the District after construction of the Improvement Project A Improvements to be financed with the Bonds, without regard to any Additional Bonds, is $88,070,000. See "APPRAISAL OF PROPERTY WITHIN THE DISTRICT." Also see "BONDHOLDERS' RISKS - The Appraisal and the Appraisal Methodology" for details on the methodology utilized by the Appraiser and certain risks associated therewith. The following table reflects the expected costs of Improvement Project A Improvements and the portion thereof expected to be paid with proceeds of the Bonds. Pursuant to the Reimbursement Agreement, the costs of the Improvement Project A Improvements that are not paid or reimbursed from proceeds of the Bonds, which are anticipated to consist primarily of improvements within Improvement Area #3 (East Residential), will be reimbursed by the Town to the Developer over time. The Town expects, but is under no obligation, to finance its obligations under the Reimbursement Agreement through the issuance of Additional Bonds in 2017 or later. See "PLAN OF DEVELOPMENT AND FINANCE — Financing of Public Improvements" and "SECURITY FOR THE BONDS; THE INDENTURE — Additional Bonds." Reimbursement Tyne of Improvement Total Cost Proceeds of the Bonds Agreement Roadway $4,389,900 $3,767,430 $622,470 Water 1,061,720 890,040 171,680 Wastewater 1,881,296 1,531,196 350,100 Drainage 1,733,872 1,154,306 579,566 Landscape/Parks 1,830,501 1,830,501 0 Duct bank improvements 733,954 640,304 93,650 Other costs (see "APPENDIX B — SERVICE AND ASSESSMENT PLAN" for details) 8,694,755 8,195,623 499,132 Total $20,325,998 18.009.400 2 316 598 Maintenance of Improvements The cost of operating, maintaining and repairing the Improvement A Projects, except for the water distribution system improvements, sanitary sewer system improvements and duct bank extension improvements, will be included in the Administrative Expenses of the District. The Town will be responsible for the maintenance and repair of the water distribution system improvements, sanitary sewer system improvements and duct bank extension improvements. The Annual Installments of the Assessments may include a Maintenance Assessment to pay such operation and maintenance expenses, as outlined in the Service and Assessment Plan. The Town may enter into an agreement (a "Maintenance Agreement") with a property owners' Association ("POA") wherein the POA agrees to operate, maintain and repair the applicable Improvement Projects A Projects in accordance with the standards set forth in the Maintenance Agreement. In the event the POA fails to operate, maintain and repair the applicable Improvement Project A Improvements in accordance with the standards set forth in the Maintenance Agreement, the Town may operate, maintain and repair the improvements or contract with another third party to operate, maintain and repair the improvements. 25 Res 14-45 Exhibit THE DEVELOPMENT The following information has been provided by the Developer. Certain of the following information is beyond the direct knowledge of the Town, and the Town has no way of guaranteeing the accuracy of such information. The Developer has reviewed this Official Statement and warrants and represents that to the best of its knowledge, neither (i) the information under the caption "THE DEVELOPMENT" nor (ii) the information relating to the Developer's plan for developing the Development under the sub -caption `BONDHOLDERS' RISKS — Dependence on the Developer" contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made herein, in the light of the circumstances under which they are made, not misleading. Overview The District encompasses approximately 85 acres being developed as a master -planned mixed-use development known as "Westlake Entrada" designed to be a European -style village with a Spanish architectural theme that will include, among other things, condominiums, residential villas, hotels, office, retail, commercial, institutional and hospitality uses, and a wedding event center, around an 8.340 -acre lake (the "Development"). The Development is designed to allow residents to work, play, live and shop all in one location. The development of the Development will begin with the construction of public improvements in three improvement areas. Improvement Area #1 (the Mixed -Use Core) consists of approximately 53 acres. Improvement Area #2 (West Residential) consists of the approximately 18 acres. Improvement Area #3 (East Residential) consists of approximately 14 acres. The boundaries of the District, Improvement Area #1, Improvement Area #2 and Improvement Area #3 are shown in the "MAP SHOWING BOUNDARIES OF DISTRICT" on page v. Maguire Partners — Solana Land, L.P. (the "Developer") plans to develop over a period of approximately three years the public infrastructure to serve and benefit the entire District (the "Improvement Project A Improvements") as well as public infrastructure to serve and benefit only Improvement Area #1 (the "Improvement Project B Improvements"). The Developer expects to develop the remainder of the Development in phases over a I- to 10 -year period of time. [The remainder of this page intentionally left blank.] 26 Res 14-45 Exhibit Conceptual Renderings of Development 27 Res 14-45 Exhibit Approved Development Plan o e •� �. said . ft,wJ. oupo Development Plans The initial development of the Development is proceeding with the construction the Improvement Project A Improvements to serve the entire District and construction of the Improvement Project B Improvements to serve Improvement Area #1. See "APPENDIX B — SERVICE AND ASSESSMENT PLAN." Improvement Project A Improvements. Improvement Project A Improvements includes roadway, water, wastewater, drainage, landscape and park improvements that benefit the entire District and are located inside and outside the District. All improvements will be constructed in accordance with Town requirements. Roadway Improvements. The roadway improvements provide for the traffic circulation within the District, allowing access to and from the adjacent roadways to each parcel. The roadway improvements include approximately 49,116 square yards of 6 -inch reinforced concrete pavement, 34,506 square yards of 8 -inch reinforced concrete pavements, 89,500 square yards of 8 -inch treated sub -grade compacted to 95% SPD, striping, street signage and signals, turn lanes and bridges. Water Improvements. The water improvements create the grid for the water line system for the District. The water distribution system improvements consist of approximately 15,640 linear feet of 12 -inch water lines, approximately 6,149 linear feet of 8 -inch water lines, fire hydrants and trench safety procedures. Wastewater Improvements. The wastewater improvements create the grid for the wastewater collection system for the District. The sanitary sewer collection system improvements consist of approximately 14,554 linear feet of 8 -inch PVC, including sewer laterals, manholes and trench safety procedures. Drainage Improvements. The drainage improvements collect and control the runoff created on each parcel in the District and convey the runoff to the large central lake (described below), which also serves as a storm water detention pond for the District. The drainage improvements consist of approximately 6,014 linear feet of various sized RCP pipes, manholes, junction boxes, inlets, headwalls and trench safety procedures. All storm sewer collection system improvements will be constructed according to the Town requirements. 28 Res 14-45 Exhibit Landscaping/Park Improvements. Landscaping, which includes public park improvements, include the creation of a 10 -acre central lake, vineyards, trees, rubble stone walls and pathways on approximately nine acres, installation of over 2'/z miles of 8-12' wide concrete paths with seating areas, public art and public lighting details, including bollards, gathering area lighting and street lighting. Duct Bank Extension. The duct bank extension improvements include 4,955 linear feet of double conduit with pull boxes and 13,891 linear feet of single conduit with pull boxes that run parallel to the street network and to be used by franchise utilities such as cable and fiber. Improvement Project B Improvements. The Improvement Project B Improvements consist of a parking structure with approximately 440 parking spaces to benefit all of the property within Improvement Area #1, with an estimated total cost of $6,160,000. See "APPENDIX B — SERVICE AND ASSESSMENT PLAN." Residential The Development is expected to include a total of 322 residences consisting of 207 single-family villas and 115 residential condos. The estimated average base home prices in the District are shown in the following table: table: Estimated Home Prices Home Sizes Base Lot Price Average Base Home Price 1200 sq. ft. Condos $115,000 $360,000 1800-2500 sq. ft. Trevis $124,000 $550,000 2501-3600 sq. ft. Casitas $165,000 $720,000 3600+ sq. ft. Villas $210,000 $995,000 The Developer's current expectations regarding the build -out of the residences are shown in the following Expected Build -Out Schedule Single -Family Expected Construction Completion Expected Final Sale Lots Date Date Improvement Area 127 September 2015 September 2018 #2 (West Residential) Improvement Area 80 September 2017 September 2020 #3 (East Residential) Total 207 The remaining 115 residential condo units as provided for under the PD1 -2 zoning (described herein under "Zoning/Permitting") will be interspersed throughout Improvement Area #1 (Mixed -Use Core) as part of the vertical -integration of uses designed to develop a true village. These units may be singular units on top of a small office building, or larger, stand-alone residential structures with first floor retail/restaurants and structured parking. The Developer currently has 56 of the initial 127 residential lots in Improvement Area #2 (West Residential) under contract to local custom builders Tresor Custom Homes and Veranda Designer Homes. An additional 13 lots are pending sale. The Developer expects to build the remaining residential lots within Improvement Area #2 (West Residential). Commercial 29 Res 14-45 Exhibit As of December 15, 2014, the Developer has entered into purchase contracts with or received letters of intent from the following businesses: • Tresor Custom Homes for office/condo pad • Orange Development, Inc. for a CVS pharmacy • Novo Development for two office buildings totaling approximately 200,000 sq. ft. • Primrose School for an approximately 52,975 sq. ft. tract of land for accredited private preschool • Ken Schaumburg/WholeLife Properties Vertical Construction Program The Developer and Co -Developer plan a vertical construction program upon completion of the first phase of the Improvement Project A Improvements. This vertical construction program is expected to be financed with an EB -5 loan (defined herein). See "THE DEVELOPER - History and Financing of the Development". See also "BONDHOLDERS' RISKS — Dependence on the Developer." This vertical construction programs entails the delivery in excess of 497,000 square feet of non-residential building space within the first 36 months of development activities and will deliver several of the key project featured buildings: Project Hotel 1 with podium parking Town Hall Hotel 2 with podium parking Restaurants Phase I Amphitheater Chapel & Event Center Homebuilding Revolver Office/Warehouse with Parking Retail Hard Corner Total Construction Budget Square Feet $ 25,807,500 139,500 4,685,000 21,000 29,972,000 126,000 6,873,500 29,500 3,018,750 12,500 3,750,000 11,000 22,356,000 60,000 8,990,000 50,000 6,891,441 29,577 $ 112,341,191 479,077 30 Res 14-45 Exhibit The vertical construction project will create a critical mass within the Development by the simultaneous construction and delivery of over one-third of Improvement Area #1 (Mixed -Use Core). Market conditions may support a more aggressive construction schedule for the future phase of building delivery. See "BONDHOLDERS' RISKS - General Risks of Real Estate Investment and Development" and " — Dependence on the Developer". Attached hereto as "APPENDIX C — DEVELOPER'S BUSINESS PLAN" is a business plan prepared and provided by the Developer solely for purposes of describing the anticipated development plans for the Development. All contracts, letters of intent and other transactions with third parties described in the business plan are non-binding in nature or are subject to the satisfaction of terms and conditions that may be beyond the control of the Developer. No assurances can be provided that the development plans described in the business plan, including the involvement in the Development of all third parties named in the business plan, will be implemented as described in APPENDIX C. Zoning/Permitting Pursuant to the Economic Development Program Agreement (the "Economic Development Agreement") between the Developer and the Town, the Developer secured planned development district ("PD1 -2") zoning, which allows flexibility for the Development to be developed as a mixture of residential, commercial and open space uses within the Development in conformity with the limitations and conditions set forth in the Economic Development Agreement and the PD1 -2 zoning ordinance. In addition, the PD1 -2 zoning provides for tailored design regulations within the Development. Copies of the Economic Development Agreement and the PD1 -2 zoning ordinance are available from the Town. Environmental A Phase One Environmental Site Assessment ("Phase One ESA") of the property within the District was completed on April 30, 2013. Based on the information presented in the Phase One ESA, there was no evidence that the Development was under environmental regulatory review or enforcement action. The site reconnaissance, regulatory database review and historical source review revealed no evidence of recognized environmental conditions involving the site. According to the website for the United States Fish and Wildlife Service, the Whooping Crane and the Least Tern are endangered species in Tarrant County. The Developer is not aware of any endangered species located on District property. Utilities The District is in a dual water and wastewater service zone with the Town and Trophy Club MUD #1 ("TCMUDI"). The Town will provide both water and wastewater service to the Development. See "THE IMPROVEMENT PROJECT A IMPROVEMENTS." The Developer expects additional utilities to be provided by: (1) Phone/Data — AT&T; (2) Electric— Tri - County Electric; (3) Cable — AT&T; and (4) Natural Gas — Atmos Energy. THE DEVELOPER The following information has been provided by the Developer and Co -Developer. Certain of the following information is beyond the direct knowledge of the Town, the Town's Financial Advisor, the Town's Economic Development Consultant and the Underwriter, and none of the Town, the Town's Financial Advisor, the Town's Economic Development Consultant or the Underwriter have any way of guaranteeing the accuracy of such information. The Developer has reviewed this Official Statement and warrants and represents that neither (i) the information herein under the caption "THE DEVELOPER" nor (ii) the information relating to the Developer under the sub -caption `BONDHOLDERS' RISKS — Dependence on the Developer" contain any untrue statement of a 31 Res 14-45 Exhibit material fact or omit to state any material fact necessary in order to make the statements made herein, in the light of the circumstances under which they are made, not misleading. Description of the Developer Mr. Mehrdad Moayedi the managing partner of Maguire Partners - Solana Land, L.P. (the "Developer"). Mr. Moayedi is also the owner of Centurion American Development Group ("Centurion"). Since 1990, Centurion has developed over 10,000 single-family lots in dozens of communities surrounding North Texas. It has worked closely with investors, land -owners, financial institutions, and vendors to acquire over 15,000 acres of land inventory for a diverse mix of developments in size and scope. Centurion's communities include amenities such as parks, golf courses, water parks themes, and hiking and biking trails. Over the past twenty years, Centurion has demonstrated the ability to successfully deliver master -planned communities that have been recognized in the real estate industry. Centurion maintains a staff of approximately 25 employees. Centurion creates single -asset limited liability companies to own development sites and contracts with developers and other professionals in the delivery of its communities. See " - Co -Developer: Building Villages, LLC" and "THE DEVELOPMENT CONSULTANT." In addition, Centurion works closely with local municipalities, commercial developers, and public school systems as part of its overall master plan. Centurion works with North Texas' top builders to deliver the latest concepts ranging from upscale, luxury homes in secluded neighborhoods to affordable housing communities for first-time home buyers. Centurion purchases and develops land in prime locations with the right mix of natural land settings, strong job growth, good school systems and access to local community shopping. A detailed snapshot of the communities Centurion has developed is presented below. Name River Walk at Central Park The Villas at Twin Creeks Kensington Gardens Water's Edge at Hogan's Glen Montalcino Estates Estancia Estates Highlands Glen The Highlands at Trophy Club Water's Edge Williamsburg Crestview at Prosper Creek Palomar Estates Estancia Verandah Terracina The Resort on Eagle Mountain Lake Travis Ranch Carter Ranch Frisco Hills Rolling Meadows Waterfront at Enchanted Bay Thornbury Rough Hollow Lexington Parke Villages of Woodland Springs Spring Creek Silver Ridge Sendera Ranch Rosemary Ridge Coun Denton Collin Dallas Denton Denton Denton Denton Denton Denton Rockwall Collin Tarrant Tarrant Rockwall Denton Tarrant Kaufman Collin Denton Tarrant Tarrant Travis Travis Travis Tarrant Tarrant Tarrant Tarrant Tarrant 32 Property Type Mixed Use Single Family Single Family Single Family Single Family Single Family Single Family Single Family Single/Multifamily Single Family Single Family Single Family Single Family Single Family Single Family Single/Multifamily Single Family Single Family Single Family Single Family Single Family Single Family Single Family Single Family Single Family Single Family Single Family Single Family Single Family Starting Home Price $ 375,000 $230,000 $500,000 $480,000 $700,000 $400,000 $300,000 $250,000 $300,000 $150,000 $250,000 $750,000 $450,000 $100,000 $350,000 $250,000 $150,000 $150,000 $200,000 $100,000 $150,000 $100,000 $550,000 $100,000 $150,000 $100,000 $150,000 $100,000 $100,000 Res 14-45 Exhibit Name Llano Springs Hills of Lake Country Garden Springs Dominion Estates Deer Creek North Creekside of Crowley Bonds Ranch Crown Valley Windmill Farms Knox Ranch Windsor Hills Saddlebrook The Villas of Indian Creek Valencia on the Lake Shale Creek Shahan Prairie Frisco Ranch Brookfield Sweetwater Crossing Prestwyck Oak Hollow Northpointe Crossing McKinney Greens The Dominion Three Thousand Flora Residences at the Stoneleigh Mountain Creek Chateaus of Coppell The Bridges at Preston Crossings Executive Biography Coun Tarrant Tarrant Tarrant Tarrant Tarrant Tarrant Tarrant Parker Kaufman Hood Ellis Ellis Denton Denton Wise Denton Denton Denton Collin Collin Collin Collin Collin Dallas Dallas Dallas Dallas Dallas Parker Property Type Single Family Single Family Single Family Single Family Single Family Single Family Single Family Single Family Single Family Mixed Use Single Family Mixed Use Single Family Single/Multifamily Single Family Single Family Single Family Single Family Single Family Mixed Use Single Family Single Family Single Family Multifamily Multifamily Multifamily Single Family Single Family Single Family Starting Home Price $150,000 $150,000 $100,000 $100,000 $100,000 $100,000 $150,000 $150,000 $100,000 $450,000 $250,000 $100,000 $150,000 $100,000 $100,000 $150,000 $150,000 $100,000 $100,000 $190,000 $100,000 $100,000 $150,000 $250,000 $250,000 $750,000 $350,000 $350,000 $250,000 Mehrdad Moayedi is the managing partner of the Developer and the President and Chief Executive Officer of Centurion. Mr. Moayedi has more than twenty-five years of direct experience in the development industry. With a background in construction and real estate, Mr. Moayedi employs a comprehensive approach to each Centurion development. Mr. Moayedi has extensive knowledge of the interconnection of all parts of residential real estate development, which provides Centurion with a unique advantage over other residential developers. By forming JBM Development in 1986, Mr. Moayedi completed several construction and fee development projects in Northeast Tarrant County, Texas subdivisions as well as various construction and remodeling projects. JBM Development, along with Centurion American Custom Homes, formed Centurion in 1990. The company has become broadly diversified, with residential developments ranging from upscale high-rise residential towers to affordable housing communities for first-time home buyers. Co -Developer: Building Villages, LLC Building Villages, LLC ("Building Villages"), a Dallas, Texas based real estate development and investment firm that brings together the experience, expertise and financial knowledge necessary to succeed in the complex mixed-use development real estate industry. The Developer has partnered with Building Villages specifically to master plan and develop the mixed-use core of the Development, then assist in the administration, execution and implementation of a development plan. Building Villages' core team has completed numerous major successful projects over the last 32 years and has a demonstrable track record of success in both residential and commercial developments that employ a reverse - engineering method of planning where the needs of the people are first identified and the development is then 33 Res 14-45 Exhibit planned and created to meet those needs. Currently, Building Villages is developing four (4) distinct greenfield "villages" across the State of Texas with a total combined value in excess of $1,600,000,000. Jeff Blackard, Founding Partner of Building Villages and CEO of Blackard Global, has over 30 years of experience in real estate development, including the development of over 15,000 single family lots. Mr. Blackard is a graduate of Northwestern University. Michael Beaty, PhD ABD, Founding Partner of Building Villages and President of Mooreland Development, has over 22 years of experience in the real estate development and construction fields, with additional work in civil and structural engineering. Mr. Beaty's doctoral work focused on ERP database programing as it specifically relates to the residential construction industry. Mr. Beaty is a graduate with honors from the Via College of Civil Engineering at Virginia Tech. History and Financing of the Development The Developer was the original developer of the Solana Business Park, originally built to be IBM's headquarters, in the Town in the mid -1980's. The Developer held title to five undeveloped tracts of land totaling 365 acres in Southlake, Texas and the Town that surrounded the former IBM headquarters, including the land comprising the District. The Developer leveraged the undeveloped land surrounding the existing office park development in order to service the debt on the existing office park. In 2012, the Developer defaulted on a loan from Beal Bank with a principal balance of $22,500,000. Beal Bank began foreclosing on the Developer's land assets but consented to stay the foreclosure proceedings when Centurion acquired 100% of the ownership interest in the Developer and brought current all interest payments and past -due property taxes. The Developer retired the Beal Bank debt using the proceeds from the sale of three of the five tracts of undeveloped land in 2012 and early 2013, leaving the remaining tracts, including the 85 acres constituting the District, free and clear of any liens. In July 2013, the Developer obtained a $9,000,000 loan from American Bank of Texas ("ABT") secured by a first lien mortgage on the property within the District as part of a larger coordinated development loan with an additional tract of land outside of Westlake. The current balance of the ABT loan is $8,000,000 and will mature in July 2015. The Developer expects to retire the ABT loan with proceeds of the EB -5 loan described herein. Centurion, the managing partner of the Developer, has executed a letter of intent with a third party to arrange financing for the Development and two other projects of the Developer through the Immigrant Investor Program (the `BB -5" program) in the aggregate amount of $200,000,000. Under the terms of the letter of intent and pursuant to the EB -5 program, the third party is expected to recruit EB -5 investors to subscribe to securities offered by a special purpose lender that will loan the funds to the Developer. The Developer's receipt of the loan proceeds is conditioned on the third party's ability to secure qualified investors under the EB -5 program. The loan from the special purpose lender will be secured by a first lien mortgage on the real property in the Development and other properties of the Developer. Under the PID Act, the Assessment Lien is a first and prior lien against the property assessed, superior to all other liens and claims except liens or claims for State, county, school district or municipal ad valorem taxes. The Developer expects to apply $126,500,000 of the EB -5 loan to financing construction of the Development, including construction of approximately 497,000 square feet of the mixed-use core of the Development and construction of 151 of the fee -simple residential villa homes. See "THE DEVELOPMENT — Vertical Construction Program" and "APPENDIX C — DEVELOPER'S BUSINESS PLAN." The Developer expects $40,000,000 of the EB -5 loan to be made available in June 2015. The initial loan proceeds are expected to be used to retire the ABT loan and begin construction of 29,500 square feet of retail and office space, as well as 24 residential villas. See "THE DEVELOPMENT." See also `BONDHOLDERS' RISKS — Dependence on the Developer". 34 Res 14-45 Exhibit THE DEVELOPMENT CONSULTANT Lenart Development Company, L.L.C. ("Lenart") is a real estate development and consulting firm focused primarily on single family and light commercial development. The firm provides fee development services for projects across the Dallas -Fort Worth Metroplex along with consulting services regarding entitlement, financing, special districts, construction, and due diligence. Lenart was formed in November of 2006. Mr. Steve Lenart, the founder and manager of the company, has over twenty-one years of experience in the real estate development industry. Mr. Lenart's experience encompasses all aspects of the business, including both homebuilding and development. He spent fourteen years with a "Big Three" public builder, where he held the executive positions of Director of Construction and then Land Division President. In his six years as Division President he managed all aspects of land and lot acquisition and development in the DFW area. Lenart currently manages the development of over thirty residential developments in the Dallas -Fort Worth area. The projects vary from simple municipal jurisdictions to public improvement districts. The firm's responsibilities include managing all of the day-to-day operations of the Development. This includes site evaluation, plan review and management, contracting, and payment of contracts. The firm's team of experienced project managers oversees the project subcontractors on a daily basis to effectively and efficiently deliver completed infrastructure and finished lots per approved plans. The firm also performs feasibility studies for projects along with entitlement, zoning, platting, and financial analysis. THE SPECIAL ASSESSMENT CONSULTANT Prior to delivery of the Bonds, the Town will enter into an agreement for administration of the District (the "MuniCap Agreement") with MuniCap, Inc. ("MuniCap") to provide specialized services related to the administration of the District needed to support the issuance of the Bonds. The MuniCap Agreement will include seven general types of services provided by MuniCap: (i) administrative support services related to the Assessments, (ii) delinquency management, (iii) prepayment of Assessments, (iv) arbitrage rebate services, (v) continuing disclosure services, (vi) accounting and audit coordination, and (vii) IRS compliance monitoring. MuniCap is a public finance consulting firm with a specialized consulting practice providing services related to the formation and administration of special tax and special assessment districts. MuniCap currently acts as the administrator for 142 special assessment and taxing districts in 17 states, including 19 public improvement districts in Texas (including the District). APPRAISAL OF PROPERTY WITHIN THE DISTRICT The Appraisal General. Jackson Claborn, Inc. (the "Appraiser"), prepared an appraisal report for the Town, dated December 16, 2014, based upon a physical inspection of the District conducted on November 1, 2014 (the "Appraisal"). The Appraisal was prepared at the request of the Town. The description herein of the Appraisal is intended to be a brief summary only. The Appraisal is attached hereto as APPENDIX F and should be read in its entirety. The conclusions reached in the Appraisal are subject to certain assumptions, hypothetical conditions and qualifications, which are set forth therein. See "APPENDIX F — APPRAISAL." Also see "BONDHOLDERS' RISKS - The Appraisal and the Appraisal Methodology" for details on the methodology utilized by the Appraiser and certain risks associated therewith. Value Estimates. The Appraiser estimated the market value of the fee simple interest in the land for 31 commercial and mixed-use parcels and two residential areas (identified in the Appraisal as the East Residential Pod and West Residential Pod) in the District under the hypothetical condition that the portion of Improvement Project A Improvements to be financed with the Bonds ("Series 2015 Improvement Project A Improvements") have been completed. See "THE IMPROVEMENT PROJECT A IMPROVEMENTS." The Appraisal does not reflect the as - is condition of the District as the Series 2015 Improvement Project A Improvements have not yet been constructed. 35 Res 14-45 Exhibit Moreover, the Appraisal does not reflect the value of the District as if sold to a single purchaser in a single transaction. See "APPENDIX F — APPRAISAL." The Westlake Entrada Development Plan and underlying zoning and land use designations permit a relatively high level of development within the District, particularly for a suburban area. The Development Plan is more similar to an established downtown area as compared to a suburban commercial and retail area — surface parking is limited in favor of structured parking and the overall planned development coverage of the site has urban densities with plans for condominium housing above retail and office development throughout the mixed-use core of the District. The Appraisal methodology takes into account the higher densities and structured or shared parking. The Appraisal is based on development levels at approximately 65% of the total density permitted by the Town. The cumulative value estimate for the property within the District using the methodologies described above and in the Appraisal and subject to the limiting conditions and assumptions set forth therein as of September 1, 2015 is $88,070,000, as shown in the following table: [The remainder of this page intentionally left blank.] 36 Res 14-45 Exhibit PEE SIMPLE MARKET VALUES - ENTRADA Parcel No. Land Size (Acres Land Size ?SF Building Size JSF Land Value M Buildinu Value (SF Opinions of Values West 12.514 544,855 127 lots $33.95 VA $18,5OD,GDO East 9.490 413,240 81) lots $2420 VA $10,0013000 1 0289 12,60[} 5,000 459.52 $125.00 $750,000 2 1.928 84,000 112,000 $41.67 $31.25 $3,50O,0OD 3 0.8161 37,501) 25,000 $53-33 $60.00 32,000,000 4 1.409 61,361) 47,200 $65.19 $34.75 $4,0[]4,000 5 1.515 68,000 44,0[10 $30.30 345.45 32,000,000 6 0.482 21,000 14,040 $71.43 $107.14 $1,500,000 7 1.951 85,0DD INA NA PYA VA 8 0.189 8,250 7,500 $60.61 $66.67 SM0,OOO 9 0.510 22,220 20,204 $&0.76 366.83 $1,350,000 10 2.936 127,888 61,500 $12.51 526.02 $1,604,000 11 0.859 37,401) 33,312 $24.06 527.02 $961),000 12 0200 8,704 5,8{70 $83.33 $125.04 $725,000 13A 1.334 58,1110 29,800 $39.58 '$77.13 $2,300,000 136 Included in 13A included in 13A 71,509 nckided in 13A 526.68 $61)0,000 14 0.754 32,851) 21,9410 $60.88 391.32 $2,61)0,4106 15A 1.033 45,1000 30,000 ,$51.11 576.67 $2,300,00117 15B lnckided In 15A Included in 15A 10.004 Inckrded in 15A 527.49 $275,000 16 1.136 49,501) 33,004 $18.69 $23.03 $925,000 17 0.758 33,000 22,0047 NA hYA NA 19A 1.302 56,701) 37,804 32822 '$42.33 $1,600,1)00 1313 Ineluded in 13A Included n 18A 60,024 linckided in 18,4 $27.07 $1,625,000 19A 1.791 78,001) 48,000 $25.64 $41.67 32,0410,000 19B tic luded n 19A, Included on 19A 86.,424 Inckxied in 19A $27.19 $2,350,0470 20 0.832 36,251) 25,01)47 $31334 544.04 51,100,000 21 2.009 87,500 97,000 $30.29 $27.32 32,650,0410 22 2.009 87,501) 97,000 $31).29 $27.32 $2,650,000 23 2.234 97,312 231,600 $46.24 $19.43 $4,5041,1)01) 24 0.172 7,500 2,100 $26.00 $92.86 $195,{71)47 25A 0.620 27,001) 13,000 $55.56 $83.33 $1,500,0471) 25B IInckided in 25A Included in 25A 30,012 lnckided in 25,4 326.66 $300,000 26A 0.413 18,4700 6,000 $41.57 $125.00 $751),01)0 26B Included in 25Ati Included in 26A 15,006 Inckidedd m 26,A $27.32 $410,000 27A 0.517 22,501) 15,0100 375.56 $113.33 $1,700,0470 27B Included in 27A Included in 27A 43,212 nckided h 27 $27.19 $1,175, GOD 28 1.18D 51,412 11,1)08 $22.56 $105.45 $1,160,000 29 0.986 42,960 17,91)0 $47.72 $114.53 $2,050,4106 30A 0.337 14,694 36.004 $119.10 $48.61 $1,7547,040 30B Included in 36A Included n 3OA 32,400 Inckided in 30A $27.16 $831),{7047 31 1.240 54,47D0 36,0047 $2778 541.67 $11500.001) Cumalative Total $88.0741.090 37 Res 14-45 Exhibit Assumptions and Limiting Conditions. The Appraisal is based upon a number of extraordinary assumptions (defined as assumptions, directly related to a specific assignment, which, if found to be false, could alter the appraiser's opinions or conclusions) and hypothetical conditions (factors that are known to be false but are presumed to be true for purposes of the appraisal). The extraordinary assumptions and hypothetical conditions which may affect the estimates as to value include, among others, the following: Extraordinary Assumptions and Hypothetical Conditions: All information relative to the remaining developed and undeveloped property located in the District, including land and lot areas and other pertinent data provided by G & A Consultants, LLC (site planning, civil engineering, platting, land surveying, landscape architecture), the Developer, the Town, and the Tarrant Appraisal District is assumed to be correct. The market conditions as discussed and considered within the Appraisal will be similar on the prospective valuation date. The prospective market value date is approximately 10 months from the effective date of the Appraisal, due to the development of Phase I taking approximately 10 months to complete. The Town approved and authorized the creation of the District to finance the costs of certain public improvements for the benefit of property in the District. Thus, as the District is developed with housing and commercial development, the corresponding tax base increases to a level which allows bonds to be sold. Proceeds from the bond sales are then used to reimburse the developers for certain development expenses. The property in the district totals 85.921 acres and upon completion of development will contain 127 residential lots (West Residential Pod), a developed pod allowing 80 future residential lots (East Residential Pod) and the 31 Mixed -Use Commercial Parcels. Proceeds from the Bonds will finance improvements that benefit all of the property. Assessments will be imposed on all property within the District for the improvements that benefit the entire District with the public improvements to be provided relative to each phase. The prospective opinions of value are based upon the specific site plan that was approved by the Town in November 2013. This site plan specifically details the number of residential lots as well as the maximum building sizes for the entire development. The values are also based on the assumption that all of the Improvement Project A Improvements to be financed with the Bonds are in place by September 1, 2015. Development includes the interior streets and utilities for the 127 residential lots, as well as the completion of water, sewer, and storm drainage and road construction to the borders of the pod allowing 80 future residential lots (East Residential Pod) as well as the 31 Mixed -Use Commercial Parcels. It is noted that the 31 mixed-use pods are zoned to allow for a substantially higher density of development than any other parcels found in the suburban communities of the Dallas/Fort Worth Market area. The Entrada zoning and land use designations are more typical of an established downtown or urban area as compared to the subject's suburban location. As noted throughout the Appraisal, the Entrada development plan is also more similar to an urban development. As such, a typical valuation utilizing the sales price per square foot of land does not properly account for this unique zoning. In response, the Appraiser has valued the 31 mixed-use pods based on the building size allowable in conjunction with the individual pods location, land size and potential highest and best use. This valuation technique utilizes the sales prices of properties located in the general market area and converts them to a price per square foot building space planned or constructed rather than to a per square foot of land size. This comparison is considered to more accurately represent a buyer's motivation for the subject properties. See "BONDHOLDERS' RISKS - The Appraisal and the Appraisal Methodology" for details on the methodology utilized by the Appraiser and certain risks associated therewith. All valuations in the Appraisal are applicable only under the estimated program of the highest and best use and are not necessarily appropriate under other programs of use. The financial markets will continue to function in a competitive, efficient fashion. 38 Res 14-45 Exhibit Value to Assessment Burden Ratio The primary security for the Bonds will consist of Pledged Revenues (which, in turn, primarily consist of the Annual Installments of the Assessments). Subject to the assumptions and limiting conditions stated therein, the Appraisal sets forth the estimated cumulative value of the appraised properties in the District to be $88,070,000. As noted above, the estimated cumulative value of the property within the District assumes (among other matters) completion of that portion of Improvement Project A Improvements to be financed with the proceeds of the Bonds. See "THE DEVELOPMENT." The principal amount of the Bonds is $26,175,000. When compared to the cumulative value of the taxable property ($88,070,000), the principal amount of the Bonds has an estimated value to assessment burden ratio of approximately 3.365 to 1. The value to assessment burden for each parcel is shown in the following table: Parcel No. West Residential Fast Residential 1 2 3 4 5 6 7 8 9 10 11 12 13A&B 14 15A&B 16 17 18A&B 19A&B 20 21 22 23 24 25A&B 26A&B 27A&B 28 29 30A&B 31 Preliminary, subject to change. Appraised Value $ 10,000,000 $ 18,500,000 $ 750,000 $ 3,500,000 $ 2,000,000 $ 4,000,000 $ 2,000,000 $ 1,500,000 $ 500,000 $ 1,350,000 $ 1,600,000 900,000 725,000 2,300,000 600,000 2,000,000 2,300,000 275,000 925,000 1,600,000 1,625,000 2,000,000 2,350,000 1,100,000 2,650,000 2,650,000 4,500,000 195,000 1,500,000 800,000 750,000 410,000 1,700,000 1,175,000 1,160,000 2,050,000 1,750,000 880,000 VALUE -TO -LIEN ANALYSIS BY PARCEL Value -to -Lien Building Use 2.32 3.72 10.92 Commercial 3.00 Office (Commercial) 6.99 Commercial 7.40 Commercial 4.37 Office (Commercial) 10.29 Office (Commercial) - Public 5.82 Commercial 5.84 Commercial 2.38 Hospitality (Commercial) - Public 2.32 12 Condos 10.92 Commercial Commercial 4.59 9 condos 7.98 Commercial Commercial 5.03 4Condos 2.83 Institutional - Office (Commercial) Commercial 2.67 24Condos Commercial 3.29 24Condos 3.84 Commercial 2.50 Hospitality (Commercial) 2.50 Hospitality (Conamercial) 1.97 Institutional 8.92 Office (Commercial) Commercial 2.71 12 Condos Commercial 4.53 6 Condos Commercial 3.61 12 Condos 9.21 Commercial 10.00 Commercial Office (Commercial) 2.63 12 Condos 4.00 Office (Commercial) 39 Description Bank 1 & Retail 2 -acres Hillside Office Complex Oyrrmastics / Dance Studios Retail Shops & Stores Administrative, Medical Office D-13 Retail 7600 sqft Parking Garage - 200 per floor, 5 floors Bank 2 - Inline Cas Pad with 2 above Childrens Theater/ Museum/ Bakery Boutique Hotel on the Hillside - 80 Villas Back of House for Coliseum- 4 stories Coliseum Condos Chapel Reception Hall - Tmgir Restaurants on the Water Residential over Restaurants Waterfront Retail First Floor Retail Residential over Retail Assisted Living Town Hall - TWO -Story Office Harbor Retail - Fust Floor Only Residential over Retail Harbor Office Wrap - 48k sqft Harbor Wrap Condos Nursing Building -First Floor Plaza Retail Hotel 1 on plaza 120 rooms Hotel on plaza 120 rooms Nursing - 193 Units at 1200 sqft Information Center 18,000 sqft Retail Residential over Retail D-13 Retail 1600 sqft Residential over Retail CVS Residential over Retail Primmse Retail Bell Tower Office Bell Tower Condos Office Pad on SH 114 Res 14-45 Exhibit In comparing the appraised value of the real property within the District and the aggregate principal amount of the Bonds, it should be noted that only the real property upon which there is a delinquent Assessment can be foreclosed upon, and the real property within the District cannot be foreclosed upon as a whole to pay delinquent Assessments of the owners of such parcels within the District unless all of the property is subject to a delinquent Assessment. In any event, individual parcels may be foreclosed upon separately to pay delinquent Assessments levied against such parcels. Other public entities whose boundaries overlap those of the District currently impose ad valorem taxes on the property within the District and will likely do so in the future. Such entities could also impose assessment liens on the property within the District. Liens created on the property within the District through the levy of ad valorem taxes as well as liens created through the levy of the Assessments are a first and prior lien superior to all others. For example, construction loans may be obtained by the Developer or home loans may be obtained by ultimate homeowners. The deeds of trust securing such debt on property within the District, however, will be in a junior position to ad valorem tax and assessment liens. See "OVERLAPPING TAXES AND DEBT" and "ASSESSMENT PROCEDURES." BONDHOLDERS' RISKS Before purchasing any of the Bonds, prospective investors and their professional advisors should carefully consider all of the risk factors described below which may create possibilities wherein interest may not be paid when due or that the Bonds may not be paid at maturity or otherwise as scheduled, or, if paid, without premium, if applicable. The following risk factors (which are not intended to be an exhaustive listing of all possible risks associated with an investment in the Bonds) should be carefully considered prior to purchasing any of the Bonds. Moreover, the order of presentation of the risks summarized below does not necessarily reflect the significance of such investment risks. THE BONDS ARE SPECIAL OBLIGATIONS OF THE TOWN PAYABLE SOLELY FROM THE PLEDGED REVENUES AND OTHER FUNDS COMPRISING THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWER OF THE TOWN AND ARE PAYABLE SOLELY FROM THE SOURCES IDENTIFIED IN THE INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR TO BE RAISED BY TAXATION, OR OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE; AND, NO OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE TOWN'S TAXING POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INTEREST OR REDEMPTION PREMIUM, IF ANY, THEREON. THE TOWN SHALL HAVE NO LEGAL OR MORAL OBLIGATION TO PAY THE BONDS OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE TRUST ESTATE. The ability of the Town to pay debt service on the Bonds as it becomes due is subject to various factors that are beyond the Town's control. These factors include, among others, (a) the ability or willingness of property owners within the District to pay the Assessments levied by the Town, (b) cash flow delays associated with the institution of foreclosure and enforcement proceedings against property within the District, (c) general and local economic conditions which may impact real property values, the ability to liquidate real property holdings and the overall value of real property development projects, and (d) general economic conditions which may impact the general ability to market and sell the lots within the District, it being understood that poor economic conditions within the Town, State and region may slow the assumed pace of sales of such lots. The rate of development of the property in the District is directly related to the vitality of the residential housing industry. In the event that the sale of the lands within the District should proceed more slowly than expected and the Developer is unable to pay Assessments, only the value of the lands, with any then -completed improvements, will be available for payment of the debt service on the Bonds, and such value can only be realized through the foreclosure or expeditious liquidation of the lands within the District. There is no assurance that the value of such lands will be sufficient for that purpose, and the expeditious liquidation of real property through foreclosure or similar means is generally considered to yield sales proceeds in a lesser sum than might otherwise be received through the orderly marketing of such real property. 40 Res 14-45 Exhibit The Bonds, which are limited, special revenue obligations of the Town and are not the obligation of Denton County, Tarrant County, the State, or any other political subdivision thereof, are secured solely by the Pledged Revenues and other funds comprising the Trust Estate. The Underwriter is not obligated to repurchase any of the Bonds, and no representation is made by the Underwriter or the Town that a market for the Bonds will develop and be maintained in the future. If a market does develop, no assurance can be given regarding future price maintenance of the Bonds. The Town has not applied for or received a rating on the Bonds. The absence of a rating could affect the future marketability of the Bonds. There is no assurance that a secondary market for the Bonds will develop or that holders who desire to sell their Bonds prior to the stated maturity will be able to do so. Assessment Limitations Annual Installments of Assessments are billed to property owners in the District. Annual Installments are due and payable, and bear the same penalties and interest for non-payment, as for ad valorem taxes as set forth under "ASSESSMENT PROCEDURES" herein. Additionally, Annual Installments established by the Service and Assessment Plan correspond in number and proportionate amount to the number of installments and principal amounts of Bonds maturing in each year and the annual Administrative Expenses for such year. See "ASSESSMENT PROCEDURES" herein. The unwillingness or inability of a property owner to pay regular property tax bills as evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax payments and Annual Installment payments in the future. In order to pay debt service on the Bonds, it is necessary that Annual Installments are paid in a timely manner. Due to the lack of predictability in the collection of Annual Installments in the newly created District, the Town has established a Reserve Account in the Reserve Fund, to be funded from the proceeds of the Bonds, to cover delinquencies. The Annual Installments are secured by the Assessment Lien. However, there can be no assurance that foreclosure proceedings will occur in a timely manner so as to avoid depletion of the Reserve Account and delay in payments of debt service on the Bonds. See `BONDHOLDERS' RISKS — Remedies and Bankruptcy" herein. Upon an ad valorem tax lien foreclosure event of a property within the District, any Assessment that is also delinquent will be foreclosed upon in the same manner as the ad valorem tax lien (assuming all necessary conditions and procedures for foreclosure are duly satisfied). To the extent that a foreclosure sale results in insufficient funds to pay in full both the delinquent ad valorem taxes and the delinquent Assessments, any remaining unpaid balance of the delinquent Assessments would then be an unsecured personal liability of the property owner. Based upon the language of Texas Local Government Code, § 372.017(b), case law relating to other types of assessment liens and opinions of the Texas Attorney General, the Assessment Lien as it relates to installment payments that are not yet due should remain in effect following an ad valorem tax lien foreclosure, with future installment payments not being accelerated. Texas Local Government Code § 372.018(d) supports this position, stating that an Assessment Lien runs with the land and the portion of an assessment payment that has not yet come due is not eliminated by foreclosure of an ad valorem tax lien. The Assessment Lien is superior to any homestead rights that first arise and are subsequently claimed by a property owner after the adoption of the Assessment Ordinance. The Assessment Lien would be subordinate to any homestead rights to the extent properly claimed by a property owner prior to the adoption of the Assessment Ordinance, thus precluding foreclosure of the Assessment Lien on such pre-existing homestead property. Under Texas law, in order to establish homestead rights, the claimant must show a combination of both overt acts of homestead usage and intention on the part of the owner to claim the land as a homestead. Mere ownership of the property alone is insufficient and the intent to use the property as a homestead must be a present one, not an intention to make the property a homestead at some indefmite time in the future. As of the date of adoption of the Assessment Ordinance, no such homestead rights had been claimed. Furthermore, the Developer is not eligible to claim homestead rights and the Developer has represented that it owns all property within the District as of the date of the Assessment Ordinance. 41 Res 14-45 Exhibit Failure by owners of the parcels to pay Annual Installments when due, depletion of the Reserve Fund, delay in foreclosure proceedings, or the inability of the Town to sell parcels which have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent installments of Assessments levied against such parcels may result in the inability of the Town to make full or punctual payments of debt service on the Bonds. THE ASSESSMENTS CONSTITUTE A FIRST AND PRIOR LIEN AGAINST THE PROPERTY ASSESSED, SUPERIOR TO ALL OTHER LIENS AND CLAIMS EXCEPT LIENS AND CLAIMS FOR STATE, COUNTY, SCHOOL DISTRICT OR MUNICIPAL AD VALOREM TAXES AND IS A PERSONAL OBLIGATION OF AND CHARGE AGAINST THE OWNERS OF PROPERTY LOCATED WITHIN THE DISTRICT. The Appraisal and the Appraisal Methodology The Appraiser states in the Appraisal that it has used a valuation technique not commonly used (but which is, in the Appraiser's opinion, appropriate given the plan for the project) due to the unique zoning of the 31 mixed- use pods included in the District. The Appraiser valued the 31 mixed-use pods based on exhibits provided by the Developer that show the most probable building size to be constructed in conjunction with each individual pod's location, land size and potential highest and best use. In the Appraisal, the Appraiser states that all valuations in the Appraisal are applicable only under the estimated program of the highest and best use and are not necessarily appropriate under other programs of use. The Town, the Developer, the Town's Financial Advisor, the Town's Economic Development Consultant and the Underwriter make no representations as to the accuracy of the Appraisal or the soundness of any of the assumptions, the valuation techniques or the methodology contained therein. Prospective investors should read the Appraisal in its entirety, including the limitations and qualifications contained therein, prior to making a decision to purchase the Bonds. See "APPENDIX F - APPRAISAL". In connection with financings that depend upon the value of land to support the repayment of debt incurred to develop the land, the value of the land, together with any then -completed improvements, will be the essential source of security for payment of the debt service on the Bonds, and such value can only be realized through the foreclosure or expeditious liquidation of the lands within the District. There is no assurance that the value of such lands will be sufficient for that purpose, and the expeditious liquidation of real property through foreclosure or similar means is generally considered to yield sales proceeds in a lesser sum than might otherwise be received through the orderly marketing of such real property. Accordingly, prospective purchasers of the Bonds should not assume that the land within the District could be sold for its appraised value or, at a foreclosure sale, for an amount sufficient to fund delinquent Assessments. Furthermore, prospective purchasers should not assume that the land within the District will not decrease in value below its appraised value. See "APPRAISAL OF PROPERTY WITHIN THE DISTRICT." Risks Related to the Current Real Estate Market During recent years, the real estate market has experienced significant slowing of new home sales and new home closings due in part to the subprime mortgage crisis involving adjustable rate mortgages and other creative mortgage financing tools that allowed persons with higher credit risk to buy homes. The economic crisis that resulted from higher interest rates, at a time when many subprime mortgages were due to reset their interest rates, has served to reduce the availability of mortgages to many potential home buyers, making entry into the real estate market difficult. These downturns in the real estate market and other factors beyond the control of the Developer, including general economic conditions, may impact the timing of lot and home sales within the District. There have been reports of various public-private efforts to relieve the subprime mortgage crisis but as of yet no one can predict with certainty when the real estate market will rebound. Competition The housing and commercial development industries in the Dallas -Fort Worth area are very competitive, and none of the Developer, the Town, the Town's Financial Advisor, the Town's Economic Development Consultant or the Underwriter can give any assurance that the building programs which are planned for the 42 Res 14-45 Exhibit Development will ever commence. The competitive position of the Developer in the sale of developed parcels or of any homebuilder in the construction and sale of single-family residential units is affected by most of the factors discussed in this section, and such competitive position is directly related to maintenance of market values in the District. Loss of Tax Exemption The Indenture contains covenants by the Town intended to preserve the exclusion from gross income of interest on the Bonds for federal income tax purposes. As discussed under the caption "TAX MATTERS" herein, interest on the Bonds could become includable in gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued, as a result of future acts or omissions of the Town in violation of its covenants in the Indenture. Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, may adversely affect the tax-exempt status of interest on the Bonds under Federal or state law and could affect the market price or marketability of the Bonds. Any such proposal could limit the value of certain deductions and exclusions, including the exclusion for tax-exempt interest. The likelihood of any such proposal being enacted cannot be predicted. Prospective purchasers of the Bonds should consult their own tax advisors regarding the foregoing matters. Bankruptcy The payment of Assessments and the ability of the Town to foreclose on the lien of delinquent unpaid Assessments may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. Although bankruptcy proceedings would not cause the Assessments to become extinguished, bankruptcy of a property owner in all likelihood would result in a delay in prosecuting foreclosure proceedings. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds, and the possibility that delinquent Assessments might not be paid in full. Direct and Overlapping Indebtedness, Assessments and Taxes The ability of an owner of property within the District to pay the Assessments could be affected by the existence of other taxes and assessments imposed upon the property. Public entities whose boundaries overlap those of the District currently impose ad valorem taxes on the property within the District and will likely do so in the future. Such entities could also impose assessment liens on the property within the District. The imposition of additional liens, or for private financing, may reduce the ability or willingness of the landowners to pay the Assessments. Depletion of Reserve Fund Failure of the owners of property within the District to pay the Assessments when due could result in the rapid, total depletion of the Reserve Fund prior to replenishment from the resale of property upon a foreclosure or otherwise or delinquency redemptions after a foreclosure sale, if any. There could be a default in payments of the principal of and interest on the Bonds if sufficient amounts are not available in the Reserve Fund. The Indenture provides that if, after a withdrawal from the Reserve Fund, the amount in the Reserve Fund is less than the Reserve Fund Requirement, the Trustee shall transfer an amount from the Pledged Revenue Fund to the Reserve Fund sufficient to cure such deficiency, as described under "SECURITY FOR THE BONDS; THE INDENTURE — Reserve Fund" herein. Hazardous Substances While governmental taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value that may be realized to the assessment is a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of 43 Res 14-45 Exhibit hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or "Superfand Act," is the most well known and widely applicable of these laws. It is likely that, should any of the parcels of land located in the District be affected by a hazardous substance, the marketability and value of parcels would be reduced by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. The value of the land within the District does not take into account the possible liability of the owner (or operator) for the remedy of a hazardous substance condition of the parcel. The Town has not independently verified, and is not aware, that the owner (or operator) of any of the parcels within the District has such a current liability with respect to such parcel; however, it is possible that such liabilities do currently exist and that the Town is not aware of them. Further, it is possible that liabilities may arise in the future with respect to any of the land within the District resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel that is realizable upon a delinquency. See "THE DEVELOPMENT — Environmental" for a discussion of previous Phase I Environmental Site Assessments. Regulation Development within the District may be subject to future federal, state and local regulations. Approval may be required from various agencies from time to time in connection with the layout and design of development in the District, the nature and extent of public improvements, land use, zoning and other matters. Failure to meet any such regulations or obtain any such approvals in a timely manner could delay or adversely affect development in the District and property values. Bondholders' Remedies and Bankruptcy In the event of default in the payment of principal of or interest on the Bonds or the occurrence of any other Event of Default under the Indenture, and upon the written request of the Owners of the Bonds of not less than a majority in principal amount of the Outstanding Bonds, the Trustee shall proceed to protect and enforce its rights and the rights of the owners of the Bonds under the Indenture by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for mandamus or the specific performance of any covenant or agreement contained therein or in aid or execution of any power granted or for the enforcement of any proper legal or equitable remedy, as the Trustee shall deem most effectual to protect and enforce such rights. The issuance of a writ of mandamus may be sought if there is no other available remedy at law to compel performance of the Bonds or the Indenture and the Town's obligations are not uncertain or disputed. The remedy of mandamus is controlled by equitable principles, so rests with the discretion of the court, but may not be arbitrarily refused. There is no acceleration of maturity of the Bonds in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. The Owners of the Bonds cannot themselves foreclose on property within the District or sell property within the District in order to pay the principal of and interest on the Bonds. The enforceability of the rights and remedies of the Owners of the Bonds further may be limited by laws relating to bankruptcy, reorganization or other similar laws of general application affecting the rights of creditors of political subdivisions such as the District. In this regard, should the Town file a petition for protection from creditors under federal bankruptcy laws, the remedy of mandamus or the right of the Town to seek judicial foreclosure of its Assessment Lien would be automatically stayed and could not be pursued unless authorized by a federal bankruptcy judge. See `BONDHOLDERS' RISKS — Bankruptcy Limitation to Bondholders' Rights" herein. 44 Res 14-45 Exhibit Any bankruptcy court with jurisdiction over bankruptcy proceedings initiated by or against a taxpayer within the District pursuant to the Federal Bankruptcy Code could, subject to its discretion, delay or limit any attempt by the Town to collect delinquent ad valorem taxes or Assessments against such taxpayer. In addition, in 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006) ("Tooke") that a waiver of sovereign immunity must be provided for by statute in "clear and unambiguous" language. In so ruling, the Court declared that statutory language such as "sue and be sued", in and of itself, did not constitute a clear and unambiguous waiver of sovereign immunity. In Tooke, the Court noted the enactment in 2005 of sections 271.151-.160, Texas Local Government Code (the "Local Government Immunity Waiver Act"), which, according to the Court, waives "immunity from suit for contract claims against most local governmental entities in certain circumstances." The Local Government Immunity Waiver Act covers cities and relates to contracts entered into by cities for providing goods or services to cities. The Town is not aware of any Texas court construing the Local Government Immunity Waiver Act in the context of whether contractual undertakings of local governments that relate to their borrowing powers are contracts covered by the Act. Because it is unclear whether the Texas legislature has effectively waived the Town's sovereign immunity from a suit for money damages in the absence of Town action, the Trustee or the Owners of the Bonds may not be able to bring such a suit against the Town for breach of the Bonds or the Indenture covenants. As noted above, the Indenture provides that Owners of the Bonds may exercise the remedy of mandamus to enforce the obligations of the Town under the Indenture. Neither the remedy of mandamus nor any other type of injunctive relief was at issue in Tooke, and it is unclear whether Tooke will be construed to have any effect with respect to the exercise of mandamus, as such remedy has been interpreted by Texas courts. In general, Texas courts have held that a writ of mandamus may be issued to require public officials to perform ministerial acts that clearly pertain to their duties. Texas courts have held that a ministerial act is defined as a legal duty that is prescribed and defined with a precision and certainty that leaves nothing to the exercise of discretion or judgment, though mandamus is not available to enforce purely contractual duties. However, mandamus may be used to require a public officer to perform legally -imposed ministerial duties necessary for the performance of a valid contract to which the State or a political subdivision of the State is a party (including the payment of monies due under a contract). No Acceleration The Indenture does not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture. Bankruptcy Limitation to Bondholders' Rights The enforceability of the rights and remedies of the owners of the Bonds may be limited by laws relating to bankruptcy, reorganization or other similar laws of general application affecting the rights of creditors of political subdivisions such as the Town. The Town is authorized under Texas law to voluntarily proceed under Chapter 9 of the Federal Bankruptcy Code, 11 U.S.C. 901-946. The Town may proceed under Chapter 9 if it (1) is generally not paying its debts, or unable to meet its debts, as they become due, (2) desires to effect a plan to adjust such debts, and (3) has either obtained the agreement of or negotiated in good faith with its creditors, is unable to negotiate with its creditors because negotiation is impracticable, or reasonably believes that a creditor may attempt to obtain a preferential transfer. If the Town decides in the future to proceed voluntarily under the Federal Bankruptcy Code, the Town would develop and file a plan for the adjustment of its debts, and the Bankruptcy Court would confirm the plan if (1) the plan complies with the applicable provisions of the Federal Bankruptcy Code, (2) all payments to be made in connection with the plan are fully disclosed and reasonable, (3) the Town is not prohibited by law from taking any action necessary to carry out the plan, (4) administrative expenses are paid in full, (5) all regulatory or electoral approvals required under Texas law are obtained and (6) the plan is in the best interests of creditors and is feasible. The rights and remedies of the Owners of the Bonds would be adjusted in accordance with the confirmed plan of adjustment of the Town's debt. 45 Res 14-45 Exhibit Management and Ownership The management and ownership of the Developer and related property owners could change in the future. Purchasers of the Bonds should not rely on the management experience of such entities. There are no assurances that such entities will not sell the subject property or that officers will not resign or be replaced. In such circumstances, a new developer or new officers in management positions may not have comparable experience in residential homebuilding. General Risks of Real Estate Investment and Development Investments in developing real estate are generally considered to be speculative in nature and to involve a high degree of risk. The Development will be subject to the risks generally incident to real estate investments and development. Many factors that may affect the Development, as well as the operating revenues of the Developer, including those derived from the Development, are not within the control of the Developer. Such factors include changes in national, regional and local economic conditions; changes in long and short term interest rates; changes in the climate for real estate purchases; changes in demand for or supply of competing properties; changes in local, regional and national market and economic conditions; unanticipated development costs, market preferences and architectural trends; unforeseen environmental risks and controls; the adverse use of adjacent and neighboring real estate; changes in interest rates and the availability of mortgage funds to buyers of the homes to be built in the Development, which may render the sale of such homes difficult or unattractive; unavailability of financing for commercial development; acts of war, terrorism or other political instability; delays or inability to obtain governmental approvals; changes in laws; moratorium; acts of God (which may result in uninsured losses); strikes; labor shortages; energy shortages; material shortages; inflation; adverse weather conditions; contractor or subcontractor defaults; and other unknown contingencies and factors beyond the control of the Developer. Furthermore, the operating revenues of the Developer may be materially adversely affected if specific conditions in the lot purchase contracts are not met. Failure to meet the lot purchase contract's conditions allows the applicable lot purchaser to terminate its obligation to purchase lots from the Developer and obtain its earnest money deposit back. See "THE DEVELOPMENT" herein. The Development cannot be initiated or completed without the Developer obtaining a variety of governmental approvals and permits, some of which have already been obtained. Certain permits are necessary to initiate construction of each phase of the Development and to allow the occupancy of residences and to satisfy conditions included in the approvals and permits. There can be no assurance that all of these permits and approvals can be obtained or that the conditions to the approvals and permits can be fulfilled. The failure to obtain any of the required approvals or fulfill any one of the conditions could cause materially adverse financial results for the Developer. For information concerning certain pending litigation that may adversely affect the schedule, timing, implementation and plans for developing portions of the Development, see "LEGAL MATTERS - Litigation - The Developer." Dependence on the Developer The Developer, as the owner of all of the parcels comprising the Development, currently has the only obligation for payment of the Assessments. The ability of the Developer to make full and timely payment of the Assessments will directly affect the ability of the Town to meet its debt service obligations with respect to the Bonds. The Developer must secure financing ("Development Financing") in the form of development loans by third parties or equity financing (or a combination thereof) in order to complete the Improvement Project A Improvements, the Improvement Project B Improvements, and the residential and commercial features of the Development described herein under "THE DEVELOPMENT" (including the vertical construction program) planned by the Developer. See "THE DEVELOPER - History and Financing of the Development". The Developer may require all or a portion of the Development Financing prior to the receipt of proceeds of the Bonds, reimbursement by the Town under the Reimbursement Agreement, proceeds from special assessment revenue bonds for subsequent phases of the Development, or any other funds that may be used to complete the Development. 46 Res 14-45 Exhibit There can be no assurances given as to the ability of the Developer to obtain Development Financing or remain in full compliance with the terms of such financing. Any delay in the Developer's anticipated receipt of funds from the Development Financing, whether due to the Developer's inability to obtain such financing, the fault of the Developer or a third party's inability to perform its commitment to provide such financing, may adversely affect the development plans described herein under "THE DEVELOPMENT". Agricultural Use Valuation and Redemption Rights Approximately 27.75 acres in the District is currently entitled to valuation for ad valorem tax purposes based upon its agricultural use. Under Texas law, an owner of land that is entitled to an agricultural valuation has the right to redeem such property after a tax sale for a period of two years after the tax sale by paying to the tax sale purchaser a 25% premium, if redeemed during the first year, or a 50% premium, if redeemed during the second year, over the purchase price paid at the tax sale and certain qualifying costs incurred by the purchaser. Although Assessments are not considered a tax under Texas law, the PID Act provides that the lien for Assessments may be enforced in the same manner as a lien for ad valorem taxes. This shared enforcement mechanism raises a possibility that the right to redeem agricultural valuation property may be available following a foreclosure of a lien for Assessment, though there is no indication in Texas law that such redemption rights would be available in such a case. The Developer expects that the agricultural use valuations within the District will be terminated in 2015, affecting tax rolls beginning in 2015. The Developer will execute an Agreement Regarding Conveyance of Right of Redemption and Waiver of Agricultural Valuation (the "Redemption Agreement") with the Town pursuant to which the Developer will convey to the Trustee for the benefit of the Owners of the Bonds its right to redeem any agricultural valuation property and require any subsequent purchaser to execute a similar conveyance. In addition, the Developer will deliver, and require any subsequent purchaser to deliver, into escrow with the Trustee a waiver of agricultural valuation, which the Trustee will be authorized to release and file with the Tarrant County Tax Assessor/Collector in the event that the subsequent owner has not paid ad valorem taxes or the special assessments due in respect of agricultural valuation property within 60 days of their due date. The Redemption Agreement will be enforceable by the Trustee on behalf of the Owners of the Bonds. Although the Redemption Agreement is intended to protect the Town and the bondholders against potential redemption rights of the Developer in the context of a foreclosure proceeding, because there is currently no case law with respect to waiver of redemption rights or an agricultural valuation, it is unclear whether the Redemption Agreement is enforceable under Texas law. Because the enforceability of the Redemption Agreement is not certain, as additional protection against the occurrence of a tax sale for non-payment of ad valorem taxes and the associated risk of redemption rights arising, the Developer will pay to the Trustee prior to delivery of the Bonds, and maintain at all times while there exists property in the District that is entitled to valuation based on its agricultural use, an amount equal to the estimated ad valorem taxes assessed against agricultural valuation property to become due in the next two years. Such funds will be held by the Trustee and used to pay delinquent ad valorem taxes on agricultural valuation property and thereby potentially avoid the possibility of a sale for non-payment of ad valorem taxes and the associated risk of redemption rights arising. In the event such funds are used to pay delinquent ad valorem taxes, the Developer will be required to replenish such funds previously held by the Trustee. A proportionate amount of such deposit will be returned to the Developer upon termination of agricultural valuation. TAX MATTERS Opinion On the date of initial delivery of the Bonds, McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel to the Town, will render its opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof ("Existing Law"), (1) interest on the Bonds for federal income tax purposes will be excludable from the "gross income" of the holders thereof and (2) the Bonds will not be treated as "specified private activity bonds" the interest on which would be included as an alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the "Code"). Except as stated above, Bond 47 Res 14-45 Exhibit Counsel to the Town will express no opinion as to any other federal, state or local tax consequences of the purchase, ownership or disposition of the Bonds. See "APPENDIX D — FORM OF BOND COUNSEL OPINION." In rendering its opinion, Bond Counsel to the Town will rely upon (a) certain information and representations of the Town, including information and representations contained in the Town's federal tax certificate, and (b) covenants of the Town contained in the Bond documents relating to certain matters, including arbitrage and the use of the proceeds of the Bonds and the property financed or refinanced therewith. Failure by the Town to observe the aforementioned representations or covenants could cause the interest on the Bonds to become taxable retroactively to the date of issuance. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied subsequent to the issuance of the Bonds in order for interest on the Bonds to be, and to remain, excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Bonds to be included in gross income retroactively to the date of issuance of the Bonds. The opinion of Bond Counsel to the Town is conditioned on compliance by the Town with such requirements, and Bond Counsel to the Town has not been retained to monitor compliance with these requirements subsequent to the issuance of the Bonds. Bond Counsel's opinion represents its legal judgment based upon its review of Existing Law and the reliance on the aforementioned information, representations and covenants. Bond Counsel's opinion is not a guarantee of a result. Existing Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Bonds. A ruling was not sought from the Internal Revenue Service by the Town with respect to the Bonds or the property financed or refinanced with proceeds of the Bonds. No assurances can be given as to whether the Internal Revenue Service will commence an audit of the Bonds, or as to whether the Internal Revenue Service would agree with the opinion of Bond Counsel. If an Internal Revenue Service audit is commenced, under current procedures the Internal Revenue Service is likely to treat the Town as the taxpayer and the Bondholders may have no right to participate in such procedure. No additional interest will be paid upon any determination of taxability. Federal Income Tax Accounting Treatment Of Original Issue Discount The initial public offering price to be paid for one or more maturities of the Bonds may be less than the principal amount thereof or one or more periods for the payment of interest on the bonds may not be equal to the accrual period or be in excess of one year (the "Original Issue Discount Bonds"). In such event, the difference between (i) the "stated redemption price at maturity" of each Original Issue Discount Bond, and (ii) the initial offering price to the public of such Original Issue Discount Bond would constitute original issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the bonds less the amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods (or during any unequal period if it is the initial or final period) and which are made during accrual periods which do not exceed one year. Under existing law, any owner who has purchased such Original Issue Discount Bond in the initial public offering is entitled to exclude from gross income (as defined in section 61 of the Code) an amount of income with respect to such Original Issue Discount Bond equal to that portion of the amount of such original issue discount allocable to the accrual period. For a discussion of certain collateral federal tax consequences, see discussion set forth below. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue Discount Bond was held by such initial owner) is includable in gross income. 48 Res 14-45 Exhibit Under existing law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Bonds and ratably within each such six-month period) and the accrued amount is added to an initial owner's basis for such Original Issue Discount Bond for purposes of determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (b) the amounts payable as current interest during such accrual period on such Original Issue Discount Bond. The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Bonds should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Bonds and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Bonds. Collateral Federal Income Tax Consequences The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Bonds. This discussion is based on existing statutes, regulations, published rulings and court decisions, all of which are subject to change or modification, retroactively. The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as financial institutions, property and casualty insurance companies, life insurance companies, individual recipients of Social Security or Railroad Retirement benefits, individuals allowed an earned income credit, certain S corporations with Subchapter C earnings and profits, foreign corporations subject to the branch profits tax, taxpayers qualifying for the health insurance premium assistance credit and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt obligations. THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE. INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE BONDS. Interest on the Bonds will be includable as an adjustment for "adjusted current earnings" to calculate the alternative minimum tax imposed on corporations by section 55 of the Code. Under section 6012 of the Code, holders of tax-exempt obligations, such as the Bonds, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a tax-exempt obligation, such as the Bonds, if such obligation was acquired at a "market discount" and if the fixed maturity of such obligation is equal to, or exceeds, one year from the date of issue. Such treatment applies to "market discount bonds" to the extent such gain does not exceed the accrued market discount of such bonds; although for this purpose, a de minimis amount of market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price at maturity or, in the case of a bond issued at an original issue discount, the "revised issue price" (i.e., the issue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days between the acquisition date and the final maturity date. 49 Res 14-45 Exhibit State, Local And Foreign Taxes Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Bonds under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. Future and Proposed Legislation Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, may adversely affect the tax-exempt status of interest on the Bonds under Federal or state law and could affect the market price or marketability of the Bonds. Any such proposal could limit the value of certain deductions and exclusions, including the exclusion for tax-exempt interest. The likelihood of any such proposal being enacted cannot be predicted. Prospective purchasers of the Bonds should consult their own tax advisors regarding the foregoing matters. LEGAL MATTERS Legal Proceedings Delivery of the Bonds will be accompanied by the unqualified approving legal opinion of the Attorney General to the effect that the Bonds are valid and legally binding obligations of the Town under the Constitution and laws of the State, payable from the proceeds of the Pledged Revenues and, based upon their examination of a transcript of certified proceedings relating to the issuance and sale of the Bonds, the legal opinion of Bond Counsel, to a like effect. McCall, Parkhurst & Horton L.L.P. serves as Bond Counsel to the Town. Andrews Kurth LLP serves as Underwriter's Counsel. The legal fees paid to Bond Counsel and Underwriter's Counsel are contingent upon the sale and delivery of the Bonds. Legal Opinions The Town will furnish the Underwriter a transcript of certain certified proceedings incident to the authorization and issuance of the Bonds. Such transcript will include a certified copy of the approving opinion of the Attorney General of Texas, as recorded in the Bond Register of the Comptroller of Public Accounts of the State of Texas, to the effect that the Bonds are valid and binding special obligations of the Town. The Town will also furnish the legal opinion of McCall, Parkhurst & Horton L.L.P., Bond Counsel, to the effect that, based upon an examination of such transcript, the Bonds are valid and binding special obligations of the Town under the Constitution and laws of the State. The legal opinion of Bond Counsel will further state that the Bonds, including principal of and interest thereon, are payable from and secured by a pledge of and lien on the Pledged Revenues. Bond Counsel will also provide a legal opinion to the effect that interest on the Bonds will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described above under the caption "TAX MATTERS," including the alternative minimum tax consequences for corporations. A copy of the opinion of Bond Counsel is attached hereto as "APPENDIX D — FORM OF BOND COUNSEL OPINION." Except as noted below, Bond Counsel did not take part in the preparation of the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information describing the Bonds in the Official Statement under the captions and sub -captions "PLAN OF DEVELOPMENT AND FINANCE — Financing of Public Improvements" (with respect to the first two paragraphs only), "DESCRIPTION OF THE BONDS," "SECURITY FOR THE BONDS; THE INDENTURE," "TAX MATTERS," "LEGAL MATTERS — Legal Proceedings" (with respect to first paragraph only), "LEGAL MATTERS — Legal Opinions," "CONTINUING DISCLOSURE" (first paragraph only), "LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS," "REGISTRATION AND QUALIFICATION OF BONDS FOR SALE" and APPENDIX A and such firm is of the opinion that the information relating to the Bonds, 50 Res 14-45 Exhibit the Bond Ordinance and the Indenture contained therein fairly and accurately describes the laws and legal issues addressed herein and, with respect to the Bonds, such information conforms to the Bond Ordinance and the Indenture. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. Litigation — The Town At the time of delivery and payment for the Bonds, the Town will certify that, except as disclosed herein, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or overtly threatened against the Town affecting the existence of the District, or seeking to restrain or to enjoin the sale or delivery of the Bonds, the application of the proceeds thereof, in accordance with the Indenture, or the collection or application of the Assessments securing the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Assessment Ordinance, the Indenture, any action of the Town contemplated by any such documents, or the collection or application of the Pledged Revenues, or in any way contesting the completeness or accuracy of this Official Statement, or contesting the powers of the Town or its authority with respect to the Bonds or any action of the Town contemplated by any documents relating to the Bonds. Litigation — The Developer On October 16, 2014, Trophy Club Municipal Utility District #1 ("TCMUDI") filed an Application for Temporary Restraining Order, Temporary Injunction, and Permanent Injunction against the Developer to prevent the Developer from relocating as part of the Development a waterline and utility easement owned by the TCMUDI within the Town of Westlake incorporated boundary. However the aforementioned line does not serve customers in the Development nor will it serve customers in the future since the entire Development will be served by the Town. While a temporary injunction hearing has been set for January 13, 2015, the parties are negotiating an agreement to relocate the waterline and easement to resolve the matter before the January 13, 2015 hearing. To that end, the parties have exchanged drafts of an Agreement Regarding the Relocation of Utility Infrastructure Improvements (the "Relocation Agreement") and hope to agree to a final executed version prior to the hearing. In the event that the Parties to the suit are unable to agree to a final form of the Relocation Agreement by January 13, 2015, the Parties will either proceed to the hearing or agree to postpone the hearing to provide additional time to negotiate the Relocation Agreement. If, at the hearing, the injunction is granted, the Developer may undertake an alternative plan, subject to review and approval by the Town. While the Developer expects this matter to be resolved in the upcoming weeks, the Development Team has also commenced work on an alternate utility plan that they believe will permit the Entrada project to move forward. The Developer anticipates that an alternative plan would allow the Development to remain substantially the same. The Developer has stated that an alternative utility plan would entail a minor relocation of the lake and hillside villas site and the balance of the Development would not need to be changed. Also, under this alternative construction plan, construction of the Development could initially proceed as scheduled for several months before any potential re -design would be required. During that time period the Developer plans to prepare the alternate utility designs if the matter has not been resolved. The Developer expects that any delay under this alternative plan would last no longer than thirty days while the alternative plans are reviewed and approved. The Developer and Development engineering team expect the infrastructure costs under this alternative plan will remain the same as the current plans for construction, and the additional engineering costs associated with finalizing the alternative plans are not expected to exceed $150,000. As noted above, a change in the Development Plan will be subject to review and approval by the Town. 51 Res 14-45 Exhibit In the event that the dispute is not resolved prior to the hearing or is resolved in a manner adverse to the Developer and the foregoing alternative construction plan cannot be achieved, the completion of the Development in accordance with the assumptions may be adversely affected, including assumptions that support the appraisal report. See "APPRAISAL OF PROPERTY WITHIN THE DISTRICT." At the time of delivery and payment for the Bonds, the Developer will certify that, except as disclosed herein, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory body, public board or body pending, or, to the best knowledge of the Developer, threatened against or affecting the Developer wherein an unfavorable decision, ruling or finding would have a material adverse effect on the financial condition or operations of the Developer or its co -general partners or would adversely affect (1) the transactions contemplated by, or the validity or enforceability of, the Bonds, the Indenture, the Bond Ordinance, the Service and Assessment Plan, the Financing Agreement, the Redemption Agreement or the Bond Purchase Agreement, or otherwise described in this Official Statement, or (2) the tax-exempt status of interest on the Bonds. SUITABILITY FOR INVESTMENT Investment in the Bonds poses certain economic risks. No dealer, broker, salesman or other person has been authorized by the Town or the Underwriter to give any information or make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by either of the foregoing. Additional information will be made available to each prospective investor, including the benefit of a site visit to the Town 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 Bonds. ENFORCEABILITY OF REMEDIES The remedies available to the owners of the 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 Bonds may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified, as to the enforceability of the remedies provided in the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors and enacted before or after such delivery. NO RATING No application for a rating on the Bonds has been made to any rating agency, nor is there any reason to believe that the Town would have been successful in obtaining an investment grade rating for the Bonds had application been made. CONTINUING DISCLOSURE The Town Pursuant to Rule 15c2-12 of the Securities and Exchange Commission (the "Rule"), the Town and the Trustee (as dissemination agent) will enter into a Continuing Disclosure Agreement (the "Town's Disclosure Agreement") for the benefit of the Owners of the Bonds (including owners of beneficial interests in the Bonds), to provide, by certain dates prescribed in the Town's Disclosure Agreement, certain financial information and operating data relating to the Town (collectively, the "Town Reports"). The specific nature of the information to be contained in the Town Reports is set forth in "APPENDIX E-1 — FORM OF TOWN'S DISCLOSURE AGREEMENT." Under certain circumstances, the failure of the Town to comply with its obligations under the Town's Disclosure Agreement constitutes an event of default thereunder. Such a default will not constitute an event of default under the Indenture, but such event of default under the Town's Disclosure Agreement would allow the Owners of the Bonds (including owners of beneficial interests in the Bonds) to bring an action for specific performance. 52 Res 14-45 Exhibit During the last five years, the Town has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. The Town has agreed to update information and to provide notices of certain specified events only as provided in the Town's Disclosure Agreement. The Town has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided in this Official Statement, except as provided in the Town's Disclosure Agreement. The Town makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell the Bonds at any future date. The Town disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of the Town's Disclosure Agreement or from any statement made pursuant to the Town's Disclosure Agreement. The Developer The Developer and the Trustee (as dissemination agent) will enter into a Continuing Disclosure Agreement (the "Developer's Disclosure Agreement") for the benefit of the Owners of the Bonds (including owners of beneficial interests in the Bonds), to provide, by certain dates prescribed in the Developer's Disclosure Agreement, certain financial information and operating data relating to the Developer (collectively, the "Developer Reports"). The specific nature of the information to be contained in the Developer Reports is set forth in "APPENDIX E-2 — FORM OF DEVELOPER'S DISCLOSURE AGREEMENT." Under certain circumstances, the failure of the Developer to comply with its obligations under the Developer's Disclosure Agreement constitutes an event of default thereunder. Such a default will not constitute an event of default under the Indenture, but such event of default under the Developer's Disclosure Agreement would allow the Owners of the Bonds (including owners of beneficial interests in the Bonds) to bring an action for specific performance. The Developer has agreed to update information and to provide notices of certain specified events only as provided in the Developer's Disclosure Agreement. The Developer has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided in this Official Statement, except as provided in the Developer's Disclosure Agreement. The Developer makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell the Bonds at any future date. The Developer disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of the Developer's Disclosure Agreement or from any statement made pursuant to the Developer's Disclosure Agreement. UNDERWRITING Jefferies LLC (the "Underwriter") has agreed to purchase the Bonds from the Town at a purchase price of $ (the par amount of the Bonds, less a reoffering discount of $ less an underwriting discount of $ ). The Underwriter's obligations are subject to certain conditions precedent and if obligated to purchase any of the Bonds the Underwriter will be obligated to purchase all of the Bonds. The Bonds may be offered and sold by the Underwriter at prices lower than the initial offering prices stated on the inside cover page hereof, and such initial offering prices may be changed from time to time by the Underwriter. REGISTRATION AND QUALIFICATION OF BONDS FOR SALE The sale of the Bonds has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Bonds have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bonds been qualified under the securities acts of any other jurisdiction. The Town assumes no responsibility for qualification of the Bonds under the securities laws of any jurisdiction in which the Bonds may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. 53 Res 14-45 Exhibit LEGAL INVESTMENT AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS The PID Act and Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Government Code, as amended) provide that the Bonds are negotiable instruments and investment securities governed by Chapter 8, Business and Commerce Code, as amended, and are legal and authorized investments for insurance companies, fiduciaries, trustees, or for the sinking funds of municipalities or other political subdivisions or public agencies of the State. With respect to investment in the Bonds by municipalities or other political subdivisions or public agencies of the State, the Public Funds Investment Act, Chapter 2256, Government Code, as amended, requires that the Bonds be assigned a rating of at least "A" or its equivalent as to investment quality by a national rating agency. See "NO RATING" above. In addition, the PID Act and various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Bonds are legal investments for state banks, savings banks, trust companies with capital of one million dollars or more, and savings and loan associations. The Bonds are eligible to secure deposits to the extent of their market value. No review by the Town has been made of the laws in other states to determine whether the Bonds are legal investments for various institutions in those states. No representation is made that the Bonds will be acceptable to public entities to secure their deposits or acceptable to such institutions for investment purposes. The Town made no investigation of other laws, rules, regulations or investment criteria which might apply to such institutions or entities or which might limit the suitability of the Bonds for any of the foregoing purposes or limit the authority of such institutions or entities to purchase or invest in the Bonds for such purposes. INVESTMENTS The Town invests its funds in investments authorized by Texas law in accordance with investment policies approved by the Town Council. Both Texas law and the Town's investment policies are subject to change. Under Texas law, the Town is authorized to invest in (1) obligations, including letter of credit, of the United States or its agencies and instrumentalities, (2) direct obligations of the State or its agencies and instrumentalities; (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other obligations, the principal and interest of which is guaranteed or insured by or backed by the full faith and credit of, the State or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States; (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent; (6) bonds issued, assumed or guaranteed by the State of Israel; (7) certificates of deposit and share certificates meeting the requirements of the Texas Public Funds Investment Act (Chapter 2256, Texas Government Code, as amended (the "PFIA")) that are issued by or through an institution that either has its main office or a branch office in Texas, and are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in clauses (1) through (6) or in any other manner and amount provided by law for Town deposits, or are invested by the Town through a broker or depository institution that has its main office or a branch office in the State and otherwise meet the requirements of the PFIA, (8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by a combination of cash and obligations described in clause (1), and are placed through a primary government securities dealer or a financial institution doing business in the State, (9) certain bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally recognized credit rating agency, (10) commercial paper with a stated maturity of 270 days or less that is rated at least A-1 or P-1 or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (11) no- load money market mutual funds registered with and regulated by the Securities and Exchange Commission that have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (12) no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, invest exclusively in obligations described in this paragraph, and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent. If specifically authorized in the authorizing document, bond proceeds may be invested 54 Res 14-45 Exhibit in guaranteed investment contracts that have a defined termination date and are secured by obligations of the United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract, other than the prohibited obligations described in the next succeeding paragraph. The Town may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAA -m or an equivalent by at least one nationally recognized rating service. The Town may also contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board to provide for the investment and management of its public funds or other funds under its control for a term up to two years, but the Town retains ultimate responsibility as fiduciary of its assets. In order to renew or extend such a contract, the Town must do so by order, ordinance, or resolution. The Town is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. Political subdivisions such as the Town are authorized to implement securities lending programs if (i) the securities loaned under the program are 100% collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either secured by (a) obligations that are described in clauses (1) through (6) of the first paragraph under this sub -caption, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm not less than "A" or its equivalent, or (c) cash invested in obligations that are described in clauses (1) through (6) and (10) through (12) of the first paragraph under this sub -caption, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the governmental body, held in the name of the governmental body and deposited at the time the investment is made with the Town or a third party designated by the Town; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State; and (iv) the agreement to lend securities has a term of one year or less. Under Texas law, the Town is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a list of authorized investments for Town funds, the maximum allowable stated maturity of any individual investment, the maximum average dollar -weighted maturity allowed for pooled fund groups, methods to monitor the market price of investments acquired with public funds, a requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus payment basis, and procedures to monitor rating changes in investments acquired with public funds and the liquidation of such investments consistent with the PFIA. All Town funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds' investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield. Under Texas law, Town investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the Town shall submit an investment report detailing: (1) the investment position of the Town, (2) that all investment officers jointly prepared and signed the report, (3) the beginning market value, the ending market value and the fully accrued interest for the reporting period of each pooled fund group, (4) the book value and market value of each separately listed asset at the end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) state law. No person may invest Town funds without express written authority from the Town Council. 55 Res 14-45 Exhibit Under Texas law the Town is additionally required to: (1) annually review its adopted policies and strategies; (2) adopt a rule, order, ordinance or resolution stating that it has reviewed its investment policy and investment strategies and records any changes made to either its investment policy or investment strategy in the respective rule, order, ordinance or resolution; (3) require any investment officers' with personal business relationships or relatives with firms seeking to sell securities to the Town to disclose the relationship and file a statement with the Texas Ethics Commission and the Town Council; (4) require the registered principal of firms seeking to sell securities to the Town to: (a) receive and review the Town's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude investment transactions conducted between the Town and the business organization that are not authorized by the Town's investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the Town's entire portfolio or requires an interpretation of subjective investment standards), and (c) deliver a written statement attesting to these requirements; (5) perform an annual audit of the management controls on investments and adherence to the Town's investment policy; (6) provide specific investment training for the officers of the Town; (7) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (8) restrict the investment in no-load mutual funds in the aggregate to no more than 15% of the entity's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; (9) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements; and (10) at least annually review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the Town. INFORMATION RELATING TO THE TRUSTEE The Town has appointed U.S. Bank National Association, a national banking association organized under the laws of the United States, to serve as Trustee. The Trustee is to carry out those duties assignable to it under the Indenture. Except for the contents of this section, the Trustee has not reviewed or participated in the preparation of this Official Statement and assumes no responsibility for the contents, accuracy, fairness or completeness of the information set forth in this Official Statement or for the recitals contained in the Indenture or the Bonds, or for the validity, sufficiency, or legal effect of any of such documents. Furthermore, the Trustee has no oversight responsibility, and is not accountable, for the use or application by the Town of any of the Bonds authenticated or delivered pursuant to the Indenture or for the use or application of the proceeds of such Bonds by the Town. The Trustee has not evaluated the risks, benefits, or propriety of any investment in the Bonds and makes no representation, and has reached no conclusions, regarding the value or condition of any assets or revenues pledged or assigned as security for the Bonds, the technical or financial feasibility of the Development, or the investment quality of the Bonds, about all of which the Trustee expresses no opinion and expressly disclaims the expertise to evaluate. Additional information about the Trustee may be found at its website at www.usbank.com. Neither the information on the Trustee's website, nor any links from that website, is a part of this Official Statement, nor should any such information be relied upon to make investment decisions regarding the Bonds. SOURCES OF INFORMATION General The information contained in this Official Statement has been obtained primarily from the Town's records, the Developer and its representatives and other sources believed to be reliable. In accordance with its responsibilities under the federal securities law, the Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of the transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement or any sale hereunder will create any implication that there has been no change in the financial condition or operations of the Town described herein since the date hereof. This Official Statement contains, in part, estimates and matters of opinion that are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opinions or that they will be 56 Res 14-45 Exhibit realized. The summaries of the statutes, resolutions, ordinances, indentures and engineering and other related reports set forth herein are included subject to all of the provisions of such documents. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Source of Certain Information The information contained in this Official Statement relating to the description of the Improvement Project A Improvements generally and, in particular, the information included in the sections captioned "THE IMPROVEMENT PROJECT A IMPROVEMENTS," "THE DEVELOPMENT," "THE DEVELOPER," "BONDHOLDERS' RISKS" (only as it pertains to the Developer and the Development) and "LEGAL MATTERS — Litigation — The Developer" have been provided by the Developer. Experts The information regarding the Service and Assessment Plan in this Official Statement has been provided by Municap, Inc., and has been included in reliance upon the authority of such firm as experts in the field of development planning and finance. The information regarding the Appraisal in this Official Statement has been provided by Jackson Clabom, Inc., Real Estate Consulting and Appraisal Services, and has been included in reliance upon the authority of such firm as experts in the field of the appraisal of real property. Updating of Official Statement If, subsequent to the date of the Official Statement, the Town learns, through the ordinary course of business and without undertaking any investigation or examination for such purposes, or is notified by the Underwriter, of any adverse event which causes the Official Statement to be materially misleading, and unless the Underwriter elects to terminate its obligation to purchase the Bonds, the Town will promptly prepare and supply to the Underwriter an appropriate amendment or supplement to the Official Statement satisfactory to the Underwriter, provided, however, that the obligation of the Town to so amend or supplement the Official Statement will terminate when the Town delivers the Bonds to the Underwriter, unless the Underwriter notifies the Town on or before such date that less than all of the Bonds have been sold to ultimate customers; in which case the Town's obligations hereunder will extend for an additional period of time (but not more than 90 days after the date the Town delivers the Bonds) until all of the Bonds have been sold to ultimate customers. FORWARD-LOOKING STATEMENTS Certain statements included or incorporated by reference in this Official Statement constitute "forward- looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "project," "anticipate," "budget" or other similar words. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE TOWN DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ANY OF ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR, OTHER THAN AS DESCRIBED UNDER "CONTINUING DISCLOSURE" HEREIN. 57 Res 14-45 Exhibit AUTHORIZATION AND APPROVAL The Town Council has approved by resolution the form and content of this Preliminary Official Statement and has authorized this Preliminary Official Statement to be used by the Underwriter in connection with the marketing and sale of the Bonds. 58 Res 14-45 Exhibit APPENDIX A FORM OF INDENTURE Res 14-45 Exhibit (THIS PAGE IS INTENTIONALLY LEFT BLANK.) Res 14-45 Exhibit INDENTURE OF TRUST By and Between TOWN OF WESTLAKE, TEXAS and U.S. BANK NATIONAL ASSOCIATION, as Trustee DATED AS OF FEBRUARY 1, 2015 SECURING [$2691759000] TOWN OF WESTLAKE, TEXAS SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) Res 14-45 Exhibit TABLE OF CONTENTS Page ARTICLE I DEFINITIONS, FINDINGS AND INTERPRETATION ...................................... 4 SectionI.I. Definitions........................................................................................................... 4 Section1.2. Findings............................................................................................................. 13 Section 1.3. Table of Contents, Titles and Headings............................................................ 13 Section 1.4. Interpretation..................................................................................................... 13 ARTICLE 11 THE BONDS......................................................................................................... 14 Section 2.1. Security for the Bonds...................................................................................... 14 Section 2.2. Limited Obligations.......................................................................................... 14 Section 2.3. Authorization for Indenture.............................................................................. 14 Section 2.4. Contract with Owners and Trustee................................................................... 15 ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THEBONDS................................................................................................................................ 15 Section 3.1. Authorization.................................................................................................... 15 Section 3.2. Date, Denomination, Maturities, Numbers and Interest ................................... 15 Section 3.3. Conditions Precedent to Delivery of Bonds ...................................................... 16 Section 3.4. Medium, Method and Place of Payment........................................................... 16 Section 3.5. Execution and Registration of Bonds............................................................... 17 Section3.6. Ownership......................................................................................................... 18 Section 3.7. Registration, Transfer and Exchange................................................................ 18 Section3.8. Cancellation...................................................................................................... 19 Section 3.9. Temporary Bonds.............................................................................................. 19 Section 3.10. Replacement Bonds.......................................................................................... 20 Section 3.11. Book -Entry Only System.................................................................................. 21 Section 3.12. Successor Securities Depository: Transfer Outside Book -Entry -Only System.22 Section 3.13. Payments to Cede & Co.................................................................................... 22 ARTICLE IV REDEMPTION OF BONDS BEFORE MATURITY ......................................... 22 Section 4.1. Limitation on Redemption................................................................................ 22 Section 4.2. Mandatory Sinking Fund Redemption.............................................................. 22 Section 4.3. Optional Redemption........................................................................................ 24 Section 4.4. Extraordinary Optional Redemption................................................................. 24 Section 4.5. Partial Redemption............................................................................................ 24 Section 4.6. Notice of Redemption to Owners..................................................................... 25 Section 4.7. Payment Upon Redemption.............................................................................. 25 Section 4.8. Effect of Redemption........................................................................................ 25 ARTICLE V FORM OF THE BONDS..................................................................................... 26 Section 5.1. Form Generally................................................................................................. 26 Section5.2. Form of the Bonds............................................................................................ 26 Section 5.3. CUSIP Registration........................................................................................... 34 Res 14-45 Exhibit Section 5.4. Legal Opinion .................. ARTICLE VI FUNDS AND ACCOUNTS ................................................................................. 34 ........................................................................... 34 Section 6.1. Establishment of Funds and Accounts.............................................................. 34 Section 6.2. Initial Deposits to Funds and Accounts............................................................ 36 Section 6.3. Pledged Revenue Fund..................................................................................... 36 Section6.4. Bond Fund......................................................................................................... 37 Section6.5. Project Fund...................................................................................................... 38 Section6.6. Redemption Fund.............................................................................................. 39 Section 6.7. Reserve Fund.................................................................................................... 39 Section 6.8. Rebate Fund: Rebatable Arbitrage.................................................................... 41 Section 6.9. Administrative Fund......................................................................................... 42 Section 6.10. Developer Property Tax Reserve Fund........................................................... 432 Section 6.11. Investment of Funds.......................................................................................... 43 Section 6.12. Security of Funds............................................................................................ 434 Section 6.13. Reimbursement Fund...................................................................................... 434 ARTICLE VII COVENANTS.................................................................................................... 44 Section 7.1. Confirmation of Assessments........................................................................... 44 Section 7.2. Collection and Enforcement of Assessments.................................................... 45 Section 7.3. Against Encumbrances...................................................................................... 45 Section 7.4. Records, Accounts, Accounting Reports.......................................................... 46 Section 7.5. Covenants Regarding Tax Exemption of Interest on Bonds ............................. 46 ARTICLE VIII LIABILITY OF TOWN..................................................................................... 48 Section 8.1. Liability of Town.............................................................................................. 48 ARTICLE IX THE TRUSTEE.................................................................................................. 50 Section 9.1. Acceptance of Trust; Trustee as Registrar and Paying Agent .......................... 50 Section 9.2. Trustee Entitled to Indemnity........................................................................... 50 Section 9.3. Responsibilities of the Trustee.......................................................................... 51 Section 9.4. Property Held in Trust...................................................................................... 51 Section 9.5. Trustee Protected in Relying on Certain Documents ........................................ 51 Section9.6. Compensation................................................................................................... 52 Section 9.7. Permitted Acts................................................................................................... 52 Section 9.8. Resignation of Trustee...................................................................................... 52 Section 9.9. Removal of Trustee........................................................................................... 53 Section 9.10. Successor Trustee.............................................................................................. 53 Section 9.11. Transfer of Rights and Property to Successor Trustee ...................................... 54 Section 9.12. Merger, Conversion or Consolidation of Trustee ............................................. 54 Section 9.13. Trustee To File Continuation Statements......................................................... 54 Section 9.14. Accounts, Periodic Reports and Certificates.................................................... 55 Section 9.15. Construction of Indenture................................................................................. 55 ARTICLE X MODIFICATION OR AMENDMENT OF THIS INDENTURE ...................... 55 Section 10.1. Amendments Permitted..................................................................................... 55 Section 10.2. Owners' Meetings............................................................................................. 56 ii Res 14-45 Exhibit Section 10.3. Procedure for Amendment with Written Consent of Owners ........................... 56 Section 10.4. Procedure for Amendment Not Requiring Owner Consent .............................. 56 Section 10.5. Effect of Supplemental Indenture..................................................................... 57 Section 10.6. Endorsement or Replacement of Bonds Issued After Amendments ................. 57 Section 10.7. Amendatory Endorsement of Bonds................................................................ 58 Section 10.8. Waiver of Default............................................................................................. 58 Section 10.9. Execution of Supplemental Indenture............................................................... 58 ARTICLE XI DEFAULT AND REMEDIES............................................................................ 58 Section 11.1. Events of Default.............................................................................................. 58 Section 11.2. Immediate Remedies for Default...................................................................... 59 Section 11.3. Restriction on Owner's Action.......................................................................... 60 Section 11.4. Application of Revenues and Other Moneys After Default .............................. 60 Section 11.5. Effect of Waiver................................................................................................ 61 Section 11.6. Evidence of Ownership of Bonds..................................................................... 61 Section 11.7. No Acceleration................................................................................................ 62 Section 11.8. Mailing of Notice.............................................................................................. 62 Section 11.9. Exclusion of Bonds........................................................................................... 62 ARTICLE XII GENERAL COVENANTS AND REPRESENTATIONS ................................ 62 Section 12.1. Representations as to Pledged Revenues.......................................................... 62 Section12.2. General.............................................................................................................. 63 ARTICLE XIII SPECIAL COVENANTS.................................................................................. 63 Section 13.1. Further Assurances; Due Performance............................................................. 63 Section 13.2. Other Obligations or Other Liens; Additional Bonds ....................................... 63 Section 13.3. Books of Record............................................................................................... 65 ARTICLE XIV PAYMENT AND CANCELLATION OF THE BONDS AND SATISFACTION OFTHE INDENTURE................................................................................................................. 65 Section 14.1. Trust Irrevocable............................................................................................... 65 Section 14.2. Satisfaction of Indenture................................................................................... 65 Section 14.3. Bonds Deemed Paid.......................................................................................... 65 ARTICLE XV MISCELLANEOUS........................................................................................... 66 Section 15.1. Benefits of Indenture Limited to Parties........................................................... 66 Section 15.2. Successor is Deemed Included in All References to Predecessor .................... 66 Section 15.3. Execution of Documents and Proof of Ownership by Owners ......................... 67 Section 15.4. No Waiver of Personal Liability....................................................................... 67 Section 15.5. Notices to and Demands on Town and Trustee ................................................ 67 Section 15.6. Partial Invalidity................................................................................................ 68 Section 15.7. Applicable Laws............................................................................................... 68 Section 15.8. Payment on Business Day................................................................................. 68 Section 15.9. Counterparts...................................................................................................... 68 EXHIBIT A DESCRIPTION OF THE PROPERTY WITHIN THE SOLANA PUBLIC IMPROVEMENT DISTRICT iii Res 14-45 Exhibit INDENTURE OF TRUST THIS INDENTURE, dated as of February 1, 2015, is by and between the TOWN OF WESTLAKE, TEXAS (the "Town"), and U.S. Bank National Association, as trustee (together with its successors, the "Trustee"). Capitalized terms used in the preambles, recitals and granting clauses and not otherwise defined shall have the meanings assigned thereto in Article I. WHEREAS, on October 18, 2013, a petition was submitted and filed with the Town Secretary of the Town (the "Town Secretary") pursuant to the Public Improvement District Assessment Act, Chapter 372, Texas Local Government Code, as amended (the "PID Act"), requesting the creation of a public improvement district located within the corporate limits of the Town to be known as Westlake Public Improvement District No. 1 (later renamed the "Solana Public Improvement District") (the "District" or "PID"); and WHEREAS, the petition contained the signatures of the owners of taxable real property representing more than fifty percent of the appraised value of taxable real property liable for assessment within the District, as determined by the then current ad valorem tax rolls of the Tarrant Appraisal District, and the signatures of record property owners who own taxable real property that constitutes more than fifty percent of the area of all taxable property that is liable for assessment by the District; and WHEREAS, on February 24, 2014, after due notice, the Town Council of the Town (the "Town Council") held the public hearing in the manner required by law on the advisability of the improvement projects and services described in the petition as required by Section 372.009 of the PID Act and on February 24, 2014, the Town Council made the findings required by Section 372.009(b) of the PID Act and, by Resolution No. 14-07, adopted by a majority of the members of the Town Council, authorized the District in accordance with its finding as to the advisability of the improvement projects and services; and WHEREAS, following the adoption of Resolution No. 14-07, the Town published notice of its authorization of the District in the Fort Worth Star Telegram, a newspaper of general circulation in the Town; and WHEREAS, no written protests of the District from any owners of record of property within the District were filed with the Town Secretary within 20 days after the date of publication of such notice; and WHEREAS, the Town Council, pursuant to Section 372.016(b) of the PID Act, published notice of a public hearing in a newspaper of general circulation in the Town to consider the proposed "Assessment Roll" and the "Service and Assessment Plan" and the levy of the "Assessments" on property in the District; and WHEREAS, the Town Council, pursuant to Section 372.016(c) of the PID Act, mailed notice of the public hearing to consider the proposed Assessment Roll and the Service and Assessment Plan and the levy of Assessments on property in the District to the last known address of the owners of the property liable for the Assessments; and Res 14-45 Exhibit WHEREAS, the Town Council convened the hearing on December 15, 2014, at which all persons who appeared, or requested to appear, in person or by their attorney, were given the opportunity to contend for or contest the Service and Assessment Plan, the Assessment Roll, and the Assessments, and to offer testimony pertinent to any issue presented on the amount of the Assessment, the allocation of Costs, the purposes of the Assessments, the special benefits of the Assessments, and the penalties and interest on annual installments and on delinquent annual installments of the Assessment; and WHEREAS, at the December 15, 2014 public hearing referenced above, there were no written objections or evidence submitted to the Town Secretary in opposition to the Service and Assessment Plan, the allocation of Costs, the Assessment Roll, or the levy of the Assessments; and WHEREAS, the Town Council closed the hearing and, after considering all written and documentary evidence presented at the hearing, including all written comments and statements filed with the Town, at a meeting held on December 15, 2014, approved and accepted the Service and Assessment Plan in conformity with the requirements of the PID Act and adopted the Assessment Ordinance, which Assessment Ordinance approved the Assessment Roll and levied the Assessments; and WHEREAS, the Assessment Ordinance also approved the levy and collection of maintenance assessments (the "Maintenance Assessments") in the event such Maintenance Assessments ever become required under the provisions of the Service and Assessment Plan; and WHEREAS, the Maintenance Assessments are not pledged to the payment of the Bonds and are not a part of the Trust Estate; and WHEREAS, on January 15, 2015, the Town Council adopted a resolution approving the execution of the Financing Agreement and the Reimbursement Agreement; and WHEREAS, the Town Council is authorized by the PID Act to issue its revenue bonds payable from the Assessments for the purpose of (i) paying the Costs, (ii) paying interest on the Bonds during and after the period of acquisition and construction of the Improvement Project A Improvements, (iii) funding a reserve fund for payment of principal and interest on the Bonds and (iv) for funding other funds as provided in Section 6.2; and WHEREAS, the Town Council now desires to issue its revenue bonds, in accordance with the PID Act, such bonds to be entitled "Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)" (the "Bonds"), such Bonds being payable solely from the Assessments and other funds pledged under this Indenture to the payment of the Bonds and for the purposes set forth in this preamble; and WHEREAS, the Trustee has agreed to accept the trusts herein created upon the terms set forth in this Indenture; NOW, THEREFORE, the Town, in consideration of the foregoing premises and acceptance by the Trustee of the trusts herein created, of the purchase and acceptance of the Bonds by the Owners thereof, and of other good and valuable consideration, the receipt and 2 Res 14-45 Exhibit sufficiency of which are hereby acknowledged, does hereby GRANT, CONVEY, PLEDGE, TRANSFER, ASSIGN, and DELIVER to the Trustee for the benefit of the Owners, a security interest in all of the moneys, rights and properties described in the Granting Clauses hereof, as follows (collectively, the "Trust Estate"): FIRST GRANTING CLAUSE The Pledged Revenues, as herein defined, including all moneys and investments held in the Pledged Funds, but excluding any moneys held in the Developer Improvement Account of the Project Fund, including any contract or any evidence of indebtedness related thereto or other rights of the Town to receive any of such moneys or investments, whether now existing or hereafter coming into existence, and whether now or hereafter acquired; and SECOND GRANTING CLAUSE Any and all other property or money of every name and nature which is, from time to time hereafter by delivery or by writing of any kind, conveyed, pledged, assigned or transferred, to the Trustee as additional security hereunder by the Town or by anyone on its behalf or with its written consent, and the Trustee is hereby authorized to receive any and all such property or money at any and all times and to hold and apply the same subject to the terms thereof, and THIRD GRANTING CLAUSE Any and all proceeds of the foregoing property and proceeds from the investment of the foregoing property; TO HAVE AND TO HOLD the Trust Estate, whether now owned or hereafter acquired, unto the Trustee and its successors or assigns; IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the benefit of all present and future Owners of the Bonds from time to time issued under and secured by this Indenture, and for enforcement of the payment of the Bonds in accordance with their terms, and for the performance of and compliance with the obligations, covenants, and conditions of this Indenture; PROVIDED, HOWEVER, if the Town or its assigns shall well and truly pay, or cause to be paid, the principal or Redemption Price of and the interest on the Bonds at the times and in the manner stated in the Bonds, according to the true intent and meaning thereof, then this Indenture and the rights hereby granted shall cease, terminate and be void; otherwise this Indenture is to be and remain in full force and effect; IN ADDITION, the Bonds are special obligations of the Town payable solely from the Pledged Revenues, as and to the extent provided in this Indenture. The Bonds do not give rise to a charge against the general credit or taxing powers of the Town and are not payable except as provided in this Indenture. Notwithstanding anything to the contrary herein, the Owners of the Bonds shall never have the right to demand payment thereof out of any funds of the Town other than the Pledged Revenues. The Town shall have no legal or moral obligation to pay for the Bonds out of any funds of the Town other than the Pledged Revenues. 3 Res 14-45 Exhibit THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated, and delivered and the Trust Estate hereby created, assigned, and pledged is to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses, and purposes as hereinafter expressed, and the Town has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective Owners from time to time of the Bonds as follows: ARTICLE I DEFINITIONS, FINDINGS AND INTERPRETATION Section 1.1. Definitions. Unless otherwise expressly provided or unless the context clearly requires otherwise in this Indenture, the following terms shall have the meanings specified below: "Account", in the singular, means any of the accounts established pursuant to Section 6.1 of this Indenture, and "Accounts", in the plural, means, collectively, all of the accounts established pursuant to Section 6.1 of this Indenture. "Additional Bonds" means the additional parity bonds that are authorized to be issued in accordance with the terms and conditions prescribed in Section 13.2(c) of this Indenture. "Administrative Fund" means that Fund established by Section 6.1 and administered pursuant to Section 6.9. "Administrative Expenses" means the costs associated with or incident to the administration, organization, maintenance and operation of Improvement Area #1, Improvement Area #2 and Improvement Area #3, including, but not limited to, the costs of. (i) creating and organizing the PID, including conducting hearings, preparing notices and petitions, and all costs incident thereto, engineering fees, legal fees and consultant fees, (ii) the annual administrative, organization, maintenance and operation costs and expenses associated with, or incident and allocable to, the administration, organization, maintenance and operation of Improvement Area #1, Improvement Area #2 and Improvement Area #3 in relation to the Improvement Project A Improvements, (iii) computing, levying, billing and collecting Assessments or the installments thereof, (iv) maintaining the record of installments of the Assessments and the system of registration and transfer of the Bonds, (v) paying and redeeming the Bonds, (vi) investing or depositing of monies, (vii) complying with the PID Act and codes with respect to the Bonds, (viii) Trustee fees and expenses relating to the Bonds, (ix) legal counsel, engineers, accountants, financial advisors, investment bankers or other consultants and advisors providing services related to the Bonds, and (x) administering the construction of the Improvement Project A Improvements. Administrative Expenses do not include payment of the actual principal of, redemption premium, and interest on the Bonds. Amounts collected in conjunction with Annual Installments for Administrative Expenses and not expended for actual Administrative Expenses shall be carried forward and applied to reduce Administrative Expenses in subsequent years to avoid the over -collection of Administrative Expenses. 4 Res 14-45 Exhibit "Administrator" means an employee or designee of the Town who shall have the responsibilities provided in the Service and Assessment Plan, this Indenture, or any other agreement or document approved by the Town related to the duties and responsibilities of the administration of the District. "Annual Debt Service" means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year (excluding interest paid from funds on deposit in the Capitalized Interest Account of the Bond Fund), assuming that the Outstanding Bonds are retired as scheduled (including by reason of Sinking Fund Installments), and (ii) the principal amount of the Outstanding Bonds due in such Bond Year (including any Sinking Fund Installments due in such Bond Year). "Annual Installment" means, with respect to each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel each annual payment of. (i) the Assessments as shown on the Assessment Rolls attached to the Service and Assessment Plan as Appendix E or in an Annual Service Plan Update, and calculated as provided in Section VI of the Service and Assessment Plan, (ii) Administrative Expenses, (iii) the prepayment reserve, and (iv) the delinquency reserve. "Annual Service Plan Update" means the annual review and update of the Service and Assessment Plan required by the PID Act and the Service and Assessment Plan. "Applicable Laws" means the PID Act, and all other laws or statutes, rules, or regulations, and any amendments thereto, of the State or of the United States, by which the Town and its powers, securities, operations, and procedures are, or may be, governed or from which its powers may be derived. "Assessments" means the "Assessment Part A" (as defined in the Service and Assessment Plan) levied against the Improvement Area #1 Assessed Parcels, the Improvement Area #2 Assessed Parcels and the Improvement Area #3 Assessed Parcels based on the special benefit conferred on such Parcels by the Improvement Project A Improvements. "Assessment Ordinance" means Ordinance No. adopted by the Town Council on January 15, 2015, as may be amended or supplemented, that levied the Assessments on the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels. "Assessment Revenues" means the revenues received by the Town from the collection of Assessments and Annual Installments, including Foreclosure Proceeds. "Assessment Roll" means the document attached as Appendix E to the Service and Assessment Plan, showing the total amount of the Assessments against each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel, as updated, modified, or amended from time to time in accordance with the terms of the Service and Assessment Plan and the PID Act. "Attorney General" means the Attorney General of the State. 5 Res 14-45 Exhibit "Authorized Denomination" means $25,000 and any integral multiple of $5,000 in excess thereof. The Town prohibits any Bond to be issued in a denomination of less than $25,000 and further prohibits the assignment of a CUSIP number to any Bond with a denomination of less than $25,000, and any attempt to accomplish either of the foregoing shall be void and of no effect. "Authorized Improvements" mean those public improvements described in Section III.B. and Appendix B of the Service and Assessment Plan and any future updates and/or amendments. "Bond" means any of the Bonds. "Bond Counsel" means McCall, Parkhurst & Horton L.L.P. or any other attorney or firm of attorneys designated by the Town that are nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities. "Bond Date" means the date designated as the initial date of the Bonds by Section 3.2(a) of this Indenture. "Bond Fund" means the Fund established pursuant to Section 6.1 and administered pursuant to Section 6.4. "Bond Ordinance" means Ordinance No. adopted by the Town Council on January 15, 2015 authorizing the issuance of the Bonds pursuant to this Indenture. "Bond Year" means the one-year period beginning on October 1 in each year and ending on the day prior to October 1 in the following year. "Bonds" means the Town's bonds authorized to be issued by Section 3.1 of this Indenture entitled "Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)." "Bonds Similarly Secured" means, collectively, any Outstanding Bonds and Additional Bonds. "Business Day" means any day other than a Saturday, Sunday or legal holiday in the State observed as such by the Town or the Trustee or any national holiday observed by the Trustee. "Certification for Payment" means a certificate executed by an engineer, construction manager or other person or entity acceptable to the Town, as evidenced by the signature of a Town Representative, specifying the amount of work performed and the cost thereof, presented to the Trustee to request funding for Costs from money on deposit in the Project Fund. Each Certification for Payment shall be substantially in the form attached to the Financing Agreement as Exhibit B. "Closing Date" means the date of the initial delivery of and payment for the Bonds. Con Res 14-45 Exhibit "Code" means the Internal Revenue Code of 1986, as amended, including applicable regulations, published rulings and court decisions. "Comptroller" means the Comptroller of Public Accounts of the State. "Costs" means the costs of the Improvement Project A Improvements to be assessed against the Improvement Area #1 Assessed Parcels, the Improvement Area #2 Assessed Parcels and the Improvement Area #3 Assessed Parcels. "Defeasance Securities" means Investment Securities then authorized by applicable law for the investment of funds to defease public securities. "Delinquency Reserve Requirement" means an amount equal to 4% of the principal amount of the then Outstanding Bonds, which amount will be funded from Assessment Revenues deposited to the Pledged Revenue Fund in accordance with the terms of this Indenture. "Delinquent Collection Costs" means, for a Parcel, interest, penalties and attorneys' fees that are authorized by the PID Act and by the Assessment Ordinance and that directly or indirectly relate to the collection of delinquent Assessments, delinquent Annual Installments, or any other delinquent payments due under the SAP, including costs and expenses related to the foreclosure of liens. "Designated Payment/Transfer Office" means (i) with respect to the initial Paying Agent/Registrar named in this Indenture, the transfer/payment office designated by the Paying Agent/Registrar and (ii) with respect to any successor Paying Agent/Registrar, the office of such successor designated and located as may be agreed upon by the Town and such successor. "Developer" means Solana Partners - Solana Land, L.P., a Texas limited partnership, and any successor thereto under the Financing Agreement. "Developer Property Tax Delinquency Amount" means, as of any date of determination, any amount of ad valorem taxes levied by any taxing entity on Parcels located in Improvement Area #1, Improvement Area #2 and Improvement Area #3 subject to an agricultural valuation for purposes of such ad valorem taxes remaining unpaid on or after February 1 of the year after such ad valorem taxes are due. "Developer Property Tax Reserve Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.10. "Developer Property Tax Reserve Fund Release Date" means the March 1 specified in Section 6.10(b). "DTC" means The Depository Trust Company of New York, New York, or any successor securities depository. "DTC Participant" means brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among DTC Participants. 7 Res 14-45 Exhibit "Financing Agreement" means the Construction, Funding, and Acquisition Agreement between the City and the Developer, dated as of January 15, 2015, as may be amended and supplemented from time to time. "Foreclosure Proceeds" means the proceeds, including interest and penalty interest, received by the Town from the enforcement of the Assessments against any Improvement Area #1 Assessed Parcel(s), Improvement Area #2 Assessed Parcel(s) or Improvement Area #3 Assessed Parcel(s), whether by foreclosure of lien or otherwise, but excluding and net of all Delinquent Collection Costs. "Fund", in the singular, means any of the funds established pursuant to Section 6.1 of this Indenture, and "Funds", in the plural, means, collectively, all of the funds established pursuant to Section 6.1 of this Indenture. "Improvement Area #1" means the area of the District to be improved by the Improvement Project A Improvements and the Improvement Project B Improvements, consisting of the property depicted in Appendix A to the Service and Assessment Plan. "Improvement Area #1 Assessed Parcels" means the Parcels that benefit from the Improvement Project A Improvements and the Improvement Project B Improvements to be provided by the PID as determined by the Town Council on which, (i) with respect to the Improvement Project A Improvements, the Assessments have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update and, (ii) with respect to the Improvement Project B Improvements, the "Assessment Part B" (as defined in the Service and Assessment Plan), which may be imposed in the future. The Assessment Part B is not part of the Trust Estate and shall not be security for the Bonds. "Improvement Area #2" means the area of the District to be improved by the Improvement Project A Improvements, consisting of the property depicted in Appendix A to the Service and Assessment Plan. "Improvement Area #2 Assessed Parcels" means the property that benefits from the Improvement Project A Improvements to be provided by the PID as determined by the Town Council on which the Assessments have been imposed as shown in the Assessment Roll for attached to the Service and Assessment Plan as Appendix E, as such assessment roll is updated each year by the Annual Service Plan Update. "Improvement Area #3" means the area of the District to be improved by the Improvement Project A Improvements, consisting of the property depicted in Appendix A to the Service and Assessment Plan. "Improvement Area #3 Assessed Parcels" means the property that benefits from the Improvement Project A Improvements to be provided by the PID as determined by the Town Council on which the Assessments have been imposed as shown in the Assessment Roll for attached to the Service and Assessment Plan as Appendix E, as such assessment roll is updated each year by the Annual Service Plan Update. N. Res 14-45 Exhibit "Improvement Project A Improvements" means the portion of the Authorized Improvements which will benefit Improvement Area #1, Improvement Area #2 and Improvement Area #3 (defined as "Improvement Project A" in the Service and Assessment Plan) and are more particularly described Section III.B. of the Service and Assessment Plan and any future updates and/or amendments thereto. "Improvement Project B Improvements" means the portion of the Authorized Improvements which will benefit Improvement Area #1 (defined as "Improvement Project B" in the Service and Assessment Plan) and are more particularly described Section III.B. of the Service and Assessment Plan and any future updates and/or amendments thereto. The Improvement Project B Improvements will not be funded from Bond proceeds. "Indenture" means this Indenture of Trust as originally executed or as it may be from time to time supplemented or amended by one or more indentures supplemental hereto and entered into pursuant to the applicable provisions hereof. "Independent Financial Consultant" means any consultant or firm of such consultants appointed by the Town who, or each of whom: (i) is judged by the Town, as the case may be, to have experience in matters relating to the issuance and/or administration of the Bonds; (ii) is in fact independent and not under the domination of the Town; (iii) does not have any substantial interest, direct or indirect, with or in the Town, or any owner of real property in the District, or any real property in the District; and (iv) is not connected with the Town as an officer or employee of the Town, but who may be regularly retained to make reports to the Town. "Initial Bonds" means the Initial Bonds authorized by Section 5.2 of this Indenture. "Interest Payment Date" means the date or dates upon which interest on the Bonds is scheduled to be paid until their respective dates of maturity or prior redemption, such dates being on March 1 and September 1 of each year, commencing September 1, 2015. "Investment Securities" means those authorized investments described in the Public Funds Investment Act, Chapter 2256, Government Code, as amended, which investments are, at the time made, included in and authorized by the Town's official investment policy as approved by the Town Council from time to time. "Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. "Outstanding" means, as of any particular date when used with reference to Bonds, all Bonds authenticated and delivered under this Indenture except (i) any Bond that has been canceled by the Trustee (or has been delivered to the Trustee for cancellation) at or before such date, (ii) any Bond for which the payment of the principal or Redemption Price of and interest on such Bond shall have been made as provided in Article IV, (iii) any Bond in lieu of or in substitution for which a new Bond shall have been authenticated and delivered pursuant to Section 3.10 and (iv) Bond alleged to have been mutilated, destroyed, cost or stolen which have been paid as provided in this Indenture. 9 Res 14-45 Exhibit "Owner" means the Person who is the registered owner of a Bond or Bonds, as shown in the Register, which shall be Cede & Co., as nominee for DTC, so long as the Bonds are in book - entry only form and held by DTC as securities depository in accordance with Section 3.11. The term "Owner", when used in connection with the Bonds Similarly Secured, shall also include the Person who is the registered owner of a Bond Similarly Secured under the terms of any indenture relating to any Additional Bonds. "Parcel" or "Parcels" means a parcel or parcels within the District identified by either a tax map identification number assigned by the Tarrant Appraisal District for real property tax purposes or by lot and block number in a final subdivision plat recorded in the real property records of Tarrant County. "Paying Agent/Registrar" means initially the Trustee, or any successor thereto as provided in this Indenture. "Person" or "Persons" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "PID Act" means Chapter 372, Improvement Districts in Municipalities and Counties, Subchapter A, Public Improvement Districts, Texas Local Government Code, as amended. "Pledged Funds" means, collectively, the Pledged Revenue Fund, the Bond Fund, the Project Fund (but excluding the Developer Improvement Account), the Reserve Fund, and the Redemption Fund. "Pledged Revenue Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.3. "Pledged Revenues" means, collectively, the (i) Assessment Revenues (excluding the portion of the Assessments and Annual Installments collected for the payment of Administrative Expenses and Delinquent Collection Costs, as set forth in the Service and Assessment Plan), (ii) the moneys held in any of the Pledged Funds and (iii) any additional revenues that the Town may pledge to the payment of the Bonds and Additional Bonds. "Prepayment" means the payment of all or a portion of an Assessment before the due date thereof. Amounts received at the time of a Prepayment which represent a payment of principal, interest or penalties on a delinquent installment of an Assessment are not to be considered a Prepayment, but rather are to be treated as the payment of the regularly scheduled Assessment. "Prepayment Costs" means interest and expenses to the date of Prepayment, plus any additional expenses related to the Prepayment, reasonably expected to be incurred by or imposed upon the Town as a result of any Prepayment. "Prepayment Reserve Requirement" means an amount equal to 1.5% of the principal amount of the then Outstanding Bonds, which amount will be funded from revenues received from the payment of Assessment Revenues deposited to the Pledged Revenue Fund in accordance with the terms of this Indenture. 10 Res 14-45 Exhibit "Project Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.5. "Purchaser" means the initial purchaser of the Bonds. "Rebatable Arbitrage" means rebatable arbitrage as defined in Section 1.148-3 of the Treasury Regulations. "Rebate Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.8. "Record Date" means the close of business on the fifteenth calendar day of the month next preceding an Interest Payment Date. "Redemption Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.6. "Redemption Price" means, when used with respect to any Bond or portion thereof, the principal amount of such Bond or such portion thereof plus the applicable premium, if any, plus accrued and unpaid interest on such Bond to the date fixed for redemption payable upon redemption thereof pursuant to this Indenture. "Redemption Waiver Agreement" means the Agreement Regarding Conveyance of Right of Redemption and Waiver of Agricultural Valuation - Solana PID by and between the Town, the Developer and the Trustee, dated as of January 15, 2015, as may be amended and supplemented from time to time. "Register" means the register specified in Article III of this Indenture. "Reimbursement Agreement" means the Reimbursement Agreement by and between the City and the Developer, dated as of January 15, 2015, as may be amended and supplemented from time to time. "Reimbursement Fund' means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.13 herein. "Reserve Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.7. "Reserve Fund Obligations" means cash or Investment Securities. "Reserve Fund Requirement" means the least of: (i) Maximum Annual Debt Service on the Bonds Similarly Secured as of the date of issuance, (ii) 125% of average Annual Debt Service on the Bonds Similarly Secured as of the date of issuance, and (iii) 10% of the proceeds of the Bonds Similarly Secured; provided, however, that such amount shall be reduced by the amount of any transfers made pursuant to subsections (c) and (d) of Section 6.7; and provided further that as a result of an optional redemption pursuant to Section 4.3, the Reserve Fund 11 Res 14-45 Exhibit Requirement shall be reduced by a percentage equal to the pro rata principal amount of Bonds Similarly Secured redeemed by such optional redemption divided by the total principal amount of the Outstanding Bonds Similarly Secured prior to such redemption. As of the date of delivery of the Bonds, the Reserve Fund Requirement is $ which is an amount equal to Maximum Annual Debt Service on the Bonds Similarly Secured as of the date of issuance. "Service and Assessment Plan" and "SAP" mean the document, including the Assessment Roll, which is attached as Exhibit B to the Assessment Ordinance, as may be updated, amended and supplemented from time to time. "Service Plan Updates" means the updates to the Service and Assessment Plan defined as "Service Plan Updates" in the Service and Assessment Plan. "Sinking Fund Installment" means the amount of money to redeem or pay at maturity the principal of a Stated Maturity of Bonds payable from such installments at the times and in the amounts provided in Section 4.2. "State" means the State of Texas. "Stated Maturity" means the date the Bonds, or any portion of the Bonds, as applicable are scheduled to mature without regard to any redemption or prepayment. "Subaccount" means any of the subaccounts established pursuant to Section 6.1 of this Indenture. "Supplemental Indenture" means an indenture which has been duly executed by the Town Representative pursuant to an ordinance adopted by the Town Council and which indenture amends or supplements this Indenture, but only if and to the extent that such indenture is specifically authorized hereunder. "Town Certificate" means a certificate signed by the Town Representative and delivered to the Trustee. "Town Order" means written instructions by the Town, executed by a Town Representative. "Town Representative" means that official or agent of the Town authorized by the Town Council to undertake the action referenced herein. "Treasury Regulations" shall have the meaning assigned to such term in Section 7.5(c). "Trust Estate" means the Trust Estate described in the granting clauses of this Indenture. "Trustee" means U.S. Bank National Association and its successors, and any other corporation or association that may at any time be substituted in its place, as provided in Article IX, such entity to serve as Trustee and Paying Agent/Registrar for the Bonds. 12 Res 14-45 Exhibit "Value of Investment Securities" means the amortized value of any Investment Securities, provided, however, that all United States of America, United States Treasury Obligations — State and Local Government Series shall be valued at par and those obligations which are redeemable at the option of the holder shall be valued at the price at which such obligations are then redeemable. The computations shall include accrued interest on the investment securities paid as a part of the purchase price thereof and not collected. For the purposes of this definition "amortized value," when used with respect to a security purchased at par means the purchase price of such security and when used with respect to a security purchased at a premium above or discount below par, means as of any subsequent date of valuation, the value obtained by dividing the total premium or discount by the number of interest payment dates remaining to maturity on any such security after such purchase and by multiplying the amount as calculated by the number of interest payment dates having passed since the date of purchase and (i) in the case of a security purchased at a premium, by deducting the product thus obtained from the purchase price, and (ii) in the case of a security purchased at a discount, by adding the product thus obtained to the purchase price. Section 1.2. Findings. The declarations, determinations and findings declared, made and found in the preamble to this Indenture are hereby adopted, restated and made a part of the operative provisions hereof. Section 1.3. Table of Contents, Titles and Headings. The table of contents, titles, and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof and shall never be considered or given any effect in construing this Indenture or any provision hereof or in ascertaining intent, if any question of intent should arise. Section 1.4. Interpretation. (a) Unless the context requires otherwise, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. (b) Words importing persons include any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or agency or political subdivision thereof. (c) Any reference to a particular Article or Section shall be to such Article or Section of this Indenture unless the context shall require otherwise. (d) When used in Article XI of this Indenture in connection with the Bonds Similarly Secured, any reference to this Indenture, Article XI of this Indenture or any Section thereunder, and/or any events of default or remedies set forth therein, such terms and references shall be read and interpreted to include any indenture relating to any Additional Bonds, the related Article or Section in such indenture, and/or the events of default and remedies set forth therein. 13 Res 14-45 Exhibit (e) This Indenture and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein to sustain the validity of this Indenture. ARTICLE II THE BONDS Section 2.1. Security for the Bonds. (a) The Bonds, as to both principal and interest, are and shall be equally and ratably secured by and payable from a first lien on and pledge of the Trust Estate. (b) The lien on and pledge of the Pledged Revenues shall be valid and binding and fully perfected from and after the Closing Date, which is the date of the delivery of this Indenture, without physical delivery or transfer of control of the Pledged Revenues, the filing of this Indenture or any other act; all as provided in Chapter 1208 of the Texas Government Code, as amended, which applies to the issuance of the Bonds and the pledge of the Pledged Revenues granted by the Town under this Indenture, and such pledge is therefore valid, effective and perfected. If Texas law is amended at any time while the Bonds are Outstanding such that the pledge of the Pledged Revenues granted by the Town under this Indenture is to be subject to the filing requirements of Chapter 9, Business and Commerce Code, then in order to preserve to the registered owners of the Bonds the perfection of the security interest in said pledge, the Town agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Business and Commerce Code and enable a filing to perfect the security interest in said pledge to occur. Section 2.2. Limited Obligations. The Bonds are special and limited obligations of the Town, payable solely from and secured solely by the Trust Estate, including the Pledged Revenues and the Pledged Funds; and the Bonds shall never be payable out of funds raised or to be raised by taxation or from any other revenues, properties or income of the Town. Section 2.3. Authorization for Indenture. The terms and provisions of this Indenture and the execution and delivery hereof by the Town to the Trustee have been duly authorized by official action of the Town Council of the Town. The Town has ascertained and it is hereby determined and declared that the execution and delivery of this Indenture is necessary to carry out and effectuate the purposes set forth in the preambles of this Indenture and that each and every covenant or agreement herein contained and made is necessary, useful and/or convenient in order to better secure the Bonds and is a contract or agreement necessary, useful and/or convenient to carry out and effectuate the purposes herein described. 14 Res 14-45 Exhibit Section 2.4. Contract with Owners and Trustee. (a) The purposes of this Indenture are to establish a lien and the security for, and to prescribe the minimum standards for the authorization, issuance, execution and delivery of, the Bonds and to prescribe the rights of the Owners, and the rights and duties of the Town and the Trustee. (b) In consideration of the purchase and acceptance of any or all of the Bonds by those who shall purchase and hold the same from time to time, the provisions of this Indenture shall be a part of the contract of the Town with the Owner, and shall be deemed to be and shall constitute a contract among the Town, the Owners, and the Trustee. ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE BONDS Section 3.1. Authorization. The Bonds are hereby authorized to be issued and delivered in accordance with the Constitution and laws of the State, including particularly the PID Act, as amended. The Bonds shall be issued in the aggregate principal amount of [$26,175,000] for the purpose of (i) paying a portion of the Costs, (ii) paying a portion of the interest on the Bonds during and after the period of acquisition and construction of the Improvement Project A Improvements, (iii) funding a reserve fund for payment of principal and interest on the Bonds, (iv) paying a portion of the costs incidental to the organization of the District, and (v) paying the costs of issuance of the Bonds. Section 3.2. Date, Denomination, Maturities, Numbers and Interest. (a) The Bonds shall be dated the date of the initial delivery thereof (the "Bond Date") and shall be issued in Authorized Denominations. The Bonds shall be in fully registered form, without coupons, and shall be numbered separately from R-1 upward, except the Initial Bond, which shall be numbered T-1. (b) Interest shall accrue and be paid on each Bond from the later of the Bond Date or the most recent Interest Payment Date to which interest has been paid or provided for, at the rate per annum set forth below until the principal thereof has been paid on the maturity date specified below or otherwise provided for. Such interest shall be payable semiannually on March 1 and September 1 of each year, commencing September 1, 2015, computed on the basis of a 360 -day year of twelve 30 -day months. (c) The Bonds shall mature on September 1 in the years and in the principal amounts and shall bear interest at the rates set forth below: 15 Res 14-45 Exhibit Principal Interest Year Amount Rate 20 20 20 20 (d) The Bonds shall be subject to mandatory sinking fund redemption, optional redemption, and extraordinary optional redemption prior to maturity as provided in Article IV, and shall otherwise have the terms, tenor, denominations, details, and specifications as set forth in the form of Bond set forth in Section 5.2. Section 3.3. Conditions Precedent to Delivery of Bonds. The Bonds shall be executed by the Town and delivered to the Trustee, whereupon the Trustee shall authenticate the Bonds and, upon payment of the purchase price of the Bonds, shall deliver the Bonds upon the order of the Town, but only upon delivery to the Trustee of- (a) £ (a) a certified copy of the Assessment Ordinance; (b) a certified copy of the Bond Ordinance; (c) a copy of the executed Financing Agreement; (d) a copy of the executed Reimbursement Agreement; (e) a copy of a Continuing Disclosure Agreement between the Town and the Trustee (in its capacity as dissemination agent thereunder) and a Continuing Disclosure Agreement between the Developer and the Trustee (in its capacity as dissemination agent thereunder); (f) a copy of this Indenture executed by the Trustee and the Town; and (g) a Town Certificate directing the authentication and delivery of the Bonds, describing the Bonds to be authenticated and delivered, designating the purchasers to whom the Bonds are to be delivered, stating the purchase price of the Bonds and stating that all items required by this Section are therewith delivered to the Trustee in form and substance satisfactory to the Town. Section 3.4. Medium, Method and Place of Payment. (a) Principal of and interest on the Bonds shall be paid in lawful money of the United States of America, as provided in this Section. (b) Interest on the Bonds shall be payable to the Owners thereof as shown in the Register at the close of business on the relevant Record Date. (c) Interest on the Bonds shall be paid by check, dated as of the Interest Payment Date, and sent, first class United States mail, postage prepaid, by the Paying Agent/Registrar to 16 Res 14-45 Exhibit each Owner at the address of each as such appears in the Register or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the Owner; provided, however, the Owner shall bear all risk and expense of such other banking arrangement. (d) The principal of each Bond shall be paid to the Owner of such Bond on the due date thereof, whether at the maturity date or the date of prior redemption thereof, upon presentation and surrender of such Bond at the Designated Payment/Transfer Office of the Paying Agent/Registrar. (e) If the date for the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, the date for such payment shall be the next succeeding day that is not a Saturday, Sunday, legal holiday, or day on which banking institutions are required or authorized to close, and payment on such date shall for all purposes be deemed to have been made on the due date thereof as specified in Section 3.2 of this Indenture. (f) Unclaimed payments of amounts due hereunder shall be segregated in a special account and held in trust, uninvested by the Paying Agent/Registrar, for the account of the Owner of the Bonds to which such unclaimed payments pertain. Subject to any escheat, abandoned property, or similar law of the State, any such payments remaining unclaimed by the Owners entitled thereto for three (3) years after the applicable payment or redemption date shall be applied to the next payment or payments on the Bonds thereafter coming due and, to the extent any such money remains after the retirement of all Outstanding Bonds, shall be paid to the Town to be used for any lawful purpose. Thereafter, none of the Town, the Paying Agent/Registrar, or any other Person shall be liable or responsible to any holders of such Bonds for any further payment of such unclaimed moneys or on account of any such Bonds, subject to any applicable escheat law or similar law of the State. Section 3.5. Execution and Registration of Bonds. (a) The Bonds shall be executed on behalf of the Town by the Mayor and Town Secretary, by their manual or facsimile signatures, and the official seal of the Town shall be impressed or placed in facsimile thereon such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the Town had been manually impressed upon each of the Bonds. (b) In the event that any officer of the Town whose manual or facsimile signature appears on the Bonds ceases to be such officer before the authentication of such Bonds or before the delivery thereof, such manual or facsimile signature nevertheless shall be valid and sufficient for all purposes as if such officer had remained in such office. (c) Except as provided below, no Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Indenture unless and until there appears thereon the Certificate of Trustee substantially in the form provided herein, duly authenticated by manual execution by an officer or duly authorized signatory of the Trustee. It shall not be required that 17 Res 14-45 Exhibit the same officer or authorized signatory of the Trustee sign the Certificate of Trustee on all of the Bonds. In lieu of the executed Certificate of Trustee described above, the Initial Bond delivered at the Closing Date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided herein, manually executed by the Comptroller, or by her duly authorized agent, which certificate shall be evidence that the Initial Bond has been duly approved by the Attorney General, is a valid and binding obligation of the Town, and has been registered by the Comptroller. (d) On the Closing Date, one Initial Bond representing the entire principal amount of all Bonds, payable in stated installments to the Purchaser, or its designee, executed with the manual or facsimile signatures of the Mayor and the Town Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller, will be delivered to the Purchaser or its designee. Upon payment for the Initial Bond, the Trustee shall cancel the Initial Bond and deliver to DTC on behalf of the Purchaser one registered definitive Bond for each year of maturity of the Bonds, in the aggregate principal amount of all Bonds for such maturity, registered in the name of Cede & Co., as nominee of DTC. Section 3.6. Ownership. (a) The Town, the Trustee, the Paying Agent/Registrar and any other Person may treat the Person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of making and receiving payment as provided herein (except interest shall be paid to the Person in whose name such Bond is registered on the Record Date) and for all other purposes, whether or not such Bond is overdue, and none of the Town, the Trustee or the Paying Agent/Registrar shall be bound by any notice or knowledge to the contrary. (b) All payments made to the Owner of any Bond shall be valid and effectual and shall discharge the liability of the Town, the Trustee and the Paying Agent/Registrar upon such Bond to the extent of the sums paid. Section 3.7. Registration, Transfer and Exchange. (a) So long as any Bond remains outstanding, the Town shall cause the Paying Agent/Registrar to keep at the Designated Payment/Transfer Office a Register in which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of Bonds in accordance with this Indenture. The Paying Agent/Registrar represents and warrants that it will maintain a copy of the Register, and shall cause the Register to be current with all registration and transfer information as from time to time may be applicable. (b) A Bond shall be transferable only upon the presentation and surrender thereof at the Designated Payment/Transfer Office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar. No transfer of any Bond shall be effective until entered in the Register. (c) The Bonds shall be exchangeable upon the presentation and surrender thereof at the Designated Payment/Transfer Office of the Paying Agent/Registrar for a Bond or Bonds of the same maturity and interest rate and in any Authorized Denomination and in an aggregate 18 Res 14-45 Exhibit principal amount equal to the unpaid principal amount of the Bond presented for exchange. The Trustee is hereby authorized to authenticate and deliver Bonds exchanged for other Bonds in accordance with this Section. (d) The Trustee is hereby authorized to authenticate and deliver Bonds transferred or exchanged in accordance with this Section. A new Bond or Bonds will be delivered by the Paying Agent/Registrar, in lieu of the Bond being transferred or exchanged, at the Designated Payment/Transfer Office, or sent by United States mail, first class, postage prepaid, to the Owner or his designee. Each transferred Bond delivered by the Paying Agent/Registrar in accordance with this Section shall constitute an original contractual obligation of the Town and shall be entitled to the benefits and security of this Indenture to the same extent as the Bond or Bonds in lieu of which such transferred Bond is delivered. (e) Each exchange Bond delivered in accordance with this Section shall constitute an original contractual obligation of the Town and shall be entitled to the benefits and security of this Indenture to the same extent as the Bond or Bonds in lieu of which such exchange Bond is delivered. (f) No service charge shall be made to the Owner for the initial registration, subsequent transfer, or exchange for a different denomination of any of the Bonds. The Paying Agent/Registrar, however, may require the Owner to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection with the registration, transfer, or exchange of a Bond. (g) Neither the Town nor the Paying Agent/Registrar shall be required to issue, transfer, or exchange any Bond or portion thereof called for redemption prior to maturity within forty-five (45) days prior to the date fixed for redemption; provided, however, such limitation shall not be applicable to an exchange by the Owner of the uncalled principal balance of a Bond. Section 3.8. Cancellation. All Bonds paid or redeemed before scheduled maturity in accordance with this Indenture, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance with this Indenture, shall be cancelled, and proper records shall be made regarding such payment, redemption, exchange, or replacement. Whenever in this Indenture provision is made for the cancellation by the Trustee of any Bonds, the Trustee shall destroy such Bonds and deliver a certificate of such destruction to the Town. Section 3.9. Temporary Bonds. (a) Following the delivery and registration of the Initial Bond and pending the preparation of definitive Bonds, the proper officers of the Town may execute and, upon the Town's request, the Trustee shall authenticate and deliver, one or more temporary Bonds that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Bonds in lieu of which they are delivered, without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers of the Town executing such temporary Bonds may determine, as evidenced by their signing of such temporary Bonds. 19 Res 14-45 Exhibit (b) Until exchanged for Bonds in definitive form, such Bonds in temporary form shall be entitled to the benefit and security of this Indenture. (c) The Town, without unreasonable delay, shall prepare, execute and deliver to the Trustee the Bonds in definitive form; thereupon, upon the presentation and surrender of the Bond or Bonds in temporary form to the Paying Agent/Registrar, the Paying Agent/Registrar shall cancel the Bonds in temporary form and the Trustee shall authenticate and deliver in exchange therefor a Bond or Bonds of the same maturity and series, in definitive form, in the Authorized Denomination, and in the same aggregate principal amount, as the Bond or Bonds in temporary form surrendered. Such exchange shall be made without the making of any charge therefor to any Owner. Section 3.10. Replacement Bonds. (a) Upon the presentation and surrender to the Paying Agent/Registrar of a mutilated Bond, the Trustee shall authenticate and deliver in exchange therefor a replacement Bond of like tenor and principal amount, bearing a number not contemporaneously outstanding. The Town or the Paying Agent/Registrar may require the Owner of such Bond to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection therewith and any other expenses connected therewith. (b) In the event that any Bond is lost, apparently destroyed or wrongfully taken, the Trustee, pursuant to the applicable laws of the State and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall authenticate and deliver a replacement Bond of like tenor and principal amount bearing a number not contemporaneously outstanding, provided that the Owner first complies with the following requirements: (i) furnishes to the Paying Agent/Registrar satisfactory evidence of his or her ownership of and the circumstances of the loss, destruction or theft of such Bond; (ii) furnishes such security or indemnity as may be required by the Paying Agent/Registrar and the Trustee to save them and the Town harmless; (iii) pays all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Trustee and the Paying Agent/Registrar and any tax or other governmental charge that is authorized to be imposed; and (iv) satisfies any other reasonable requirements imposed by the Town and the Trustee. (c) After the delivery of such replacement Bond, if a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the Town and the Paying Agent/Registrar shall be entitled to recover such replacement Bond from the Person to whom it was delivered or any Person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost, or expense incurred by the Town, the Paying Agent/Registrar or the Trustee in connection therewith. 20 Res 14-45 Exhibit (d) In the event that any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the Paying Agent/Registrar, in its discretion, instead of issuing a replacement Bond, may pay such Bond if it has become due and payable or may pay such Bond when it becomes due and payable. (e) Each replacement Bond delivered in accordance with this Section shall constitute an original additional contractual obligation of the Town and shall be entitled to the benefits and security of this Indenture to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. Section 3.11. Book -Entry Only System. (a) The Bonds shall initially be issued in book -entry -only form and shall be deposited with DTC, which is hereby appointed to act as the securities depository therefor, in accordance with the letter of representations from the Town to DTC. On the Closing Date the definitive Bonds shall be issued in the form of a single typewritten certificate for each maturity thereof registered in the name of Cede & Co., as nominee for DTC. (b) With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the Town and the Paying Agent/Registrar shall have no responsibility or obligation to any DTC Participant or to any Person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the Town and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant will respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other Person, other than an Owner, as shown on the Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other Person, other than an Owner, as shown in the Register of any amount with respect to principal of, premium, if any, or interest on the Bonds. Notwithstanding any other provision of this Indenture to the contrary, the Town and the Paying Agent/Registrar shall be entitled to treat and consider the Person in whose name each Bond is registered in the Register as the absolute owner of such Bond for the purpose of payment of principal of, premium, if any, and interest on Bonds, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfer with respect to such Bond, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owners as shown in the Register, as provided in this Indenture, and all such payments shall be valid and effective to fully satisfy and discharge the Town's obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the Register, shall receive a Bond certificate evidencing the obligation of the Town to make payments of amounts due pursuant to this Indenture. Upon delivery by DTC to the Paying Agent/Registrar 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 this Indenture with respect to interest checks or drafts being mailed to the registered owner at the close of business on the Record Date, the word "Cede & Co." in this Indenture shall refer to such new nominee of DTC. 21 Res 14-45 Exhibit Section 3.12. Successor Securities Depository: Transfer Outside Book -Entry -Only System. In the event that the Town determines that DTC is incapable of discharging its responsibilities described herein and in the letter of representations from the Town to DTC, the Town shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository; or (ii) notify DTC and DTC Participants of the availability through DTC of certificated Bonds and cause the Paying Agent/Registrar to transfer one or more separate registered Bonds to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the Register in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Owners transferring or exchanging Bonds shall designate, in accordance with the provisions of this Indenture. Section 3.13. Payments to Cede & Co. Notwithstanding any other provision of this Indenture to the contrary, so long as any Bonds are registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Bonds, and all notices with respect to such Bonds shall be made and given, respectively, in the manner provided in the blanket letter of representations from the Town to DTC. ARTICLE IV REDEMPTION OF BONDS BEFORE MATURITY Section 4.1. Limitation on Redemption. The Bonds shall be subject to redemption before their scheduled maturity only as provided in this Article IV. Section 4.2. Mandatory Sinking Fund Redemption. (a) The Bonds maturing on September 1 in the years 20_, 20_, 20_ and 20 (collectively, "Term Bonds"), are subject to mandatory sinking fund redemption prior to their respective maturities and will be redeemed by the Town in part at the redemption price equal to the principal amount of the Bonds called for redemption, plus accrued and unpaid interest to the date fixed for redemption from moneys available for such purpose in the Principal and Interest Account of the Bond Fund pursuant to Article VI, on the dates and in the respective sinking fund installments as set forth in the following schedule: 22 Res 14-45 Exhibit Term Bonds Maturing September 1, 20_ Redemption Date September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_* Principal Amount Term Bonds Maturing September 1, 20 Redemption Date September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_* Principal Amount Term Bonds Maturing September 1, 20 Redemption Date September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_* Princibal Amount Term Bonds Maturing September 1, 20_ Redemption Date September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20 September 1, 20_* Ntatea maturity. Principal Amount (b) At least thirty (30) days prior to each sinking fund redemption date, the Trustee shall select a principal amount of Bonds of such maturity equal to the Sinking Fund Installment amount of such Bonds to be redeemed, shall call such Bonds for redemption on such scheduled mandatory redemption date, and shall give notice of such redemption, as provided in Section 4.6. (c) The principal amount of Bonds required to be redeemed on any redemption date pursuant to subparagraph (a) of this Section 4.2 shall be reduced, at the option of the Town, by 23 Res 14-45 Exhibit the principal amount of any Bonds of such maturity which, at least 30 days prior to the sinking fund redemption date shall have been acquired by the Town at a price not exceeding the principal amount of such Bonds plus accrued unpaid interest to the date of purchase thereof, and delivered to the Trustee for cancellation. (d) The principal amount of Bonds required to be redeemed on any redemption date pursuant to subparagraph (a) of this Section 4.2 shall be reduced on a pro rata basis among Sinking Fund Installments by the principal amount of any Bonds which, at least 30 days prior to the sinking fund redemption date, shall have been redeemed pursuant to the optional redemption or extraordinary optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Section 4.3. Optional Redemption. The Town reserves the right and option to redeem Bonds before their scheduled maturity date, in whole or in part, on any date on or after September 1, 20_, such redemption date or dates to be fixed by the Town, at the redemption price (expressed as a percentage of principal amount) applicable to the date of redemption falling within the applicable redemption period, as set forth in the following schedule, plus accrued interest to the date of redemption: Redemption Period Redemption Price September 1, 20_ through August 31, 20_ 103% September 1, 20_ through August 31, 20_ 102% September 1, 20_ through August 31, 20_ 101% September 1, 20_ and thereafter. 100% Section 4.4. Extraordinary Optional Redemption. The Town reserves the right and option to redeem Bonds before their respective scheduled maturity dates, in whole or in part, on the fifteenth day of any month, at a redemption price equal to the principal amount of the Bonds called for redemption, plus accrued and unpaid interest to the date fixed for redemption, from amounts on deposit in the Redemption Fund as a result of Prepayments (including related transfers to the Redemption Fund as provided in Section 6.7(c)). Section 4.5. Partial Redemption. (a) If less than all of the Bonds are to be redeemed pursuant to either Sections 4.2, 4.3 or 4.4, Bonds shall be redeemed in increments of $5,000 by any method selected by the Trustee that results in a random selection, provided that no redemption shall cause the principal amount of any Bond to be less than the minimum Authorized Denomination for such Bond. Each Bond shall be treated as representing the number of Bonds that is obtained by dividing the principal amount of such Bond by the minimum Authorized Denomination for such Bond. 24 Res 14-45 Exhibit (b) Upon surrender of any Bond for redemption in part, the Trustee in accordance with Section 3.7 of this Indenture, shall authenticate and deliver an exchange Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered, such exchange being without charge. Section 4.6. Notice of Redemption to Owners. (a) The Trustee shall give notice of any redemption of Bonds by sending notice by first class United States mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the Owner of each Bond or portion thereof to be redeemed, at the address shown in the Register. (b) The notice shall state the redemption date, the Redemption Price, the place at which the Bonds are to be surrendered for payment, and, if less than all the Bonds Outstanding are to be redeemed, and subject to Section 4.5, an identification of the Bonds or portions thereof to be redeemed, any conditions to such redemption and that on the redemption date, if all conditions, if any, to such redemption have been satisfied, such Bond shall become due and payable. (c) Any notice given as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. (d) The Town has the right to rescind any optional redemption or extraordinary optional redemption described in Section 4.3 or 4.4 by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption shall be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under this Indenture. The Trustee shall mail notice of rescission of redemption in the same manner notice of redemption was originally provided. Section 4.7. Payment Upon Redemption. (a) The Trustee shall make provision for the payment of the Bonds to be redeemed on such date by setting aside and holding in trust an amount from the Redemption Fund or otherwise received by the Trustee from the Town and shall use such funds solely for the purpose of paying the Redemption Price on the Bonds being redeemed. (b) Upon presentation and surrender of any Bond called for redemption at the designated corporate trust office of the Trustee on or after the date fixed for redemption, the Trustee shall pay the Redemption Price on such Bond to the date of redemption from the moneys set aside for such purpose. Section 4.8. Effect of Redemption. Notice of redemption having been given as provided in Section 4.6 of this Indenture, the Bonds or portions thereof called for redemption shall become due and payable on the date fixed for redemption provided that funds for the payment of the principal amount plus accrued unpaid interest on such Bonds to the date fixed for redemption are on deposit with the Trustee; 25 Res 14-45 Exhibit thereafter, such Bonds or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Bonds are presented and surrendered for payment on such date. ARTICLE V FORM OF THE BONDS Section 5.1. Form Generally. (a) The Bonds, including the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of the Trustee, and the Assignment to appear on each of the Bonds, (i) shall be substantially in the form set forth in this Article with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Indenture, and (ii) may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including any reproduction of an opinion of counsel) thereon as, consistently herewith, may be determined by the Town or by the officers executing such Bonds, as evidenced by their execution thereof. (b) Any portion of the text of any Bonds may be set forth on the reverse side thereof, with an appropriate reference thereto on the face of the Bonds. (c) The definitive Bonds shall be typewritten, printed, lithographed, or engraved, and may be produced by any combination of these methods or produced in any other similar manner, all as determined by the officers executing such Bonds, as evidenced by their execution thereof. (d) The Initial Bond submitted to the Attorney General may be typewritten and photocopied or otherwise reproduced. Section 5.2. Form of the Bonds. (a) Form of Bond. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF TEXAS, THE TOWN, OR ANY OTHER POLITICAL CORPORATION, SUBDIVISION OR AGENCY THEREOF, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THIS BOND. REGISTERED United States of America REGISTERED NO. State of Texas $ TOWN OF WESTLAKE, TEXAS SPECIAL ASSESSMENT REVENUE BOND, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) we Res 14-45 Exhibit INTEREST RATE MATURITY DATE DATE OF DELIVERY CUSIP NUMBER % September 1, 20_ February 5, 2015 The Town of Westlake, Texas (the "Town"), for value received, hereby promises to pay, solely from the Pledged Revenues, to or registered assigns, on the Maturity Date, as specified above, the sum of DOLLARS unless this Bond shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provision for such payment shall have been made, and to pay interest on the unpaid principal amount hereof from the later of the Date of Delivery, as specified above, or the most recent Interest Payment Date to which interest has been paid or provided for until such principal amount shall have been paid or provided for, at the per annum rate of interest specified above, computed on the basis of a 360 -day year of twelve 30 -day months, such interest to be paid semiannually on March 1 and September 1 of each year, commencing September 1, 2015. Capitalized terms appearing herein that are defined terms in the Indenture (defined below), have the meanings assigned to them in the Indenture. Reference is made to the Indenture for such definitions and for all other purposes. The principal of this Bond shall be payable without exchange or collection charges in lawful money of the United States of America upon presentation and surrender of this Bond at the corporate trust office in St. Paul, Minnesota (the "Designated Payment/Transfer Office"), of U.S. Bank National Association, as trustee and paying agent/registrar (the "Trustee"), or, with respect to a successor trustee and paying agent/registrar, at the Designated Payment/Transfer Office of such successor. Interest on this Bond is payable by check dated as of the Interest Payment Date, mailed by the Trustee to the registered owner at the address shown on the registration books kept by the Trustee or by such other customary banking arrangements acceptable to the Trustee, requested by, and at the risk and expense of, the Person to whom interest is to be paid. For the purpose of the payment of interest on this Bond, the registered owner shall be the Person in whose name this Bond is registered at the close of business on the "Record Date," which shall be the fifteenth calendar day of the month next preceding such Interest Payment Date; provided, however, that in the event of nonpayment of interest on a scheduled Interest Payment Date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Trustee, if and when funds for the payment of such interest have been received from the Town. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five Business Days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Owner of a Bond appearing on the books of the Trustee at the close of business on the last Business Day preceding the date of mailing such notice. 27 Res 14-45 Exhibit If a date for the payment of the principal of or interest on the Bonds is a Saturday, Sunday, legal holiday, or a day on which banking institutions in the city in which the Designated Payment/Transfer Office is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding Business Day, and payment on such date shall have the same force and effect as if made on the original date payment was due. This Bond is one of a duly authorized issue of assessment revenue bonds of the Town having the designation specified in its title (herein referred to as the 'Bonds"), dated as of the Date of Delivery and issued in the aggregate principal amount of [$26,175,000] and issued, with the limitations described herein, pursuant to an Indenture of Trust, dated as of February 1, 2015 (the "Indenture"), by and between the Town and the Trustee, to which Indenture reference is hereby made for a description of the amounts thereby pledged and assigned, the nature and extent of the lien and security, the respective rights thereunder to the holders of the Bonds, the Trustee, and the Town, and the terms upon which the Bonds are, and are to be, authenticated and delivered and by this reference to the terms of which each holder of this Bond hereby consents. All Bonds issued under the Indenture are equally and ratably secured by the amounts thereby pledged and assigned. The Bonds are being issued for the purpose of (i) paying a portion of the Costs, (ii) paying a portion of the interest on the Bonds during and after the period of acquisition and construction of the Improvement Project A Improvements, (iii) funding a reserve fund for payment of principal and interest on the Bonds, (iv) paying a portion of the costs incidental to the organization of the District, and (v) paying the costs of issuance of the Bonds. The Bonds are limited obligations of the Town payable solely from the Pledged Revenues. Reference is hereby made to the Indenture, copies of which are on file with and available upon request from the Trustee, for the provisions, among others, with respect to the nature and extent of the duties and obligations of the Town, the Trustee and the Owners. The Owner of this Bond, by the acceptance hereof, is deemed to have agreed and consented to the terms, conditions and provisions of the Indenture. Notwithstanding any provision hereof, the Indenture may be released and the obligation of the Town to make money available to pay this Bond may be defeased by the deposit of money and/or certain direct or indirect Defeasance Securities sufficient for such purpose as described in the Indenture. The Bonds are issuable as fully registered bonds only in denominations of $25,000 and any multiple of $5,000 in excess thereof ("Authorized Denominations"). The Town prohibits the breaking up or allocation of CUSIP numbers to any Bond or Bonds in denominations of less than $25,000, and any attempt to do so will be void and of no effect. The Bonds maturing on September 1 in the years 20_, 20_, 20_ and 20 (collectively, "Term Bonds"), are subject to mandatory sinking fund redemption prior to their respective maturities and will be redeemed by the Town in part a redemption price equal to the principal amount thereof plus accrued and unpaid interest thereon to the date set for redemption from moneys available for such purpose in the Principal and Interest Account of the Bond Fund pursuant to Article VI of the Indenture, on the dates and in the respective sinking fund installments as set forth in the following schedule: Res 14-45 Exhibit Term Bonds Maturing September 1, 20_ Redemption Date September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_* Principal Amount Term Bonds Maturing September 1, 20 Redemption Date September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_* Principal Amount Term Bonds Maturing September 1, 20 Redemption Date September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_* Princibal Amount Term Bonds Maturing September 1, 20_ Redemption Date September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20_ September 1, 20 September 1, 20_* Ntatea maturity. Principal Amount At least thirty (30) days prior to each sinking fund redemption date, the Trustee shall select for redemption by lot, or by any other customary method that results in a random selection, a principal amount of Bonds of such maturity equal to the sinking fund installments of such Bonds to be redeemed, shall call such Bonds for redemption on such scheduled mandatory sinking fund redemption date, and shall give notice of such redemption, as provided in Section 4.6 of the Indenture. 29 Res 14-45 Exhibit The principal amount of Bonds required to be redeemed on any sinking fund redemption date shall be reduced, at the option of the Town, by the principal amount of any Bonds of such maturity which, at least 30 days prior to the sinking fund redemption date shall have been acquired by the Town at a price not exceeding the principal amount of such Bonds plus accrued and unpaid interest to the date of purchase thereof, and delivered to the Trustee for cancellation. The principal amount of Bonds required to be redeemed on any sinking fund redemption date shall be reduced on a pro rata basis among Sinking Fund Installments by the principal amount of any Bonds which, at least 30 days prior to the sinking fund redemption date, shall have been redeemed pursuant to the optional redemption or extraordinary optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. The Town reserves the right and option to redeem Bonds before their scheduled maturity date, in whole or in part, on any date on or after September 1, 20_, such redemption date or dates to be fixed by the Town, at the redemption price (expressed as a percentage of principal amount) applicable to the date of redemption falling within the applicable redemption period, as set forth in the following schedule, plus accrued interest to the date of redemption: Redemption Period Redemption Price September 1, 20_ through August 31, 20_ 103% September 1, 20_ through August 31, 20_ 102% September 1, 20 through August 31, 20_ 101% September 1, 20 and thereafter. 100% Bonds are subject to extraordinary optional redemption prior to maturity in whole or in part, on the fifteenth day of any month, at a redemption price equal to the principal amount of the Bonds called for redemption, plus accrued and unpaid interest to the date fixed for redemption from amounts on deposit in the Redemption Fund as a result of Prepayments. The Trustee shall give notice of any redemption of Bonds by sending notice by first class United States mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the Owner of each Bond (or part thereof) to be redeemed, at the address shown on the Register. The notice shall state the redemption date, the Redemption Price, the place at which the Bonds are to be surrendered for payment, and, if less than all the Bonds Outstanding are to be redeemed, an identification of the Bonds or portions thereof to be redeemed. Any notice so given shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. With respect to any optional redemption of the Bonds, unless the Trustee has received funds sufficient to pay the Redemption Price of the Bonds to be redeemed before giving of a notice of redemption, the notice may state the Town may condition redemption on the receipt of such funds by the Trustee on or before the date fixed for the redemption, or on the satisfaction of any other prerequisites set forth in the notice of redemption. If a conditional notice of redemption is given and such prerequisites to the redemption and sufficient funds are not received, the notice shall be of no force and effect, the Town shall not redeem the Bonds and the Trustee shall give 30 Res 14-45 Exhibit notice, in the manner in which the notice of redemption was given, that the Bonds have not been redeemed. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Town and the rights of the holders of the Bonds under the Indenture at any time Outstanding affected by such modification. The Indenture also contains provisions permitting the holders of specified percentages in aggregate principal amount of the Bonds at the time Outstanding, on behalf of the holders of all the Bonds, to waive compliance by the Town with certain past defaults under the Bond Ordinance or the Indenture and their consequences. Any such consent or waiver by the holder of this Bond or any predecessor Bond evidencing the same debt shall be conclusive and binding upon such holder and upon all future holders thereof and of any Bond issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such consent or waiver is made upon this Bond. As provided in the Indenture, this Bond is transferable upon surrender of this Bond for transfer at the Designated Payment/Transfer Office, with such endorsement or other evidence of transfer as is acceptable to the Trustee, and upon delivery to the Trustee of such certifications and/or opinion of counsel as may be required under the Indenture for the transfer of this Bond. Upon satisfaction of such requirements, one or more new fully registered Bonds of the same Stated Maturity, of Authorized Denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the Town nor the Trustee shall be required to issue, transfer or exchange any Bond called for redemption where such redemption is scheduled to occur within 45 calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. The Town, the Trustee, and any other Person may treat the Person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided (except interest shall be paid to the Person in whose name this Bond is registered on the Record Date or Special Record Date, as applicable) and for all other purposes, whether or not this Bond be overdue, and neither the Town nor the Trustee shall be affected by notice to the contrary. The Town has reserved the right to issue Additional Bonds on the terms and conditions specified in the Indenture. NEITHER THE FULL FAITH AND CREDIT NOR THE GENERAL TAXING POWER OF THE TOWN OF WESTLAKE, TEXAS, TARRANT COUNTY, TEXAS OR THE STATE OF TEXAS, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE BONDS. IT IS HEREBY CERTIFIED AND RECITED that the issuance of this Bond and the series of which it is a part is duly authorized by law; that all acts, conditions and things required to be done precedent to and in the issuance of the Bonds have been properly done and performed and have happened in regular and due time, form and manner, as required by law; and that the total indebtedness of the Town, including the Bonds, does not exceed any Constitutional or statutory limitation. 31 Res 14-45 Exhibit IN WITNESS WHEREOF, the Town Council of the Town has caused this Bond to be executed under the official seal of the Town. Town Secretary, Town of Westlake, Texas Mayor, Town of Westlake, Texas [TOWN SEAL] (b) Form of Comptroller's Registration Certificate. The following Registration Certificate of Comptroller of Public Accounts shall appear on the Initial Bond: REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER § OF PUBLIC ACCOUNTS § REGISTER NO. THE STATE OF TEXAS § I HEREBY CERTIFY THAT there is on file and of record in my office a certificate to the effect that the Attorney General of the State of Texas has approved this Bond, and that this Bond has been registered this day by me. WITNESS MY SIGNATURE AND SEAL OF OFFICE this Comptroller of Public Accounts of the State of Texas [SEAL] (c) Form of Certificate of Trustee. CERTIFICATE OF TRUSTEE It is hereby certified that this is one of the Bonds of the series of Bonds referred to in the within mentioned Indenture. DATED: U.S. Bank National Association, as Trustee 32 Authorized Signatory Res 14-45 Exhibit (d) Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (print or typewrite name and address, including zip code, of Transferee.) (Social Security or other identifying number: ) the within Bond and all rights hereunder, and hereby irrevocably constitutes and appoints , attorney, to register the transfer of the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed by: NOTICE: The signature on this Assignment must correspond with the name of the registered owner as it appears on the face of Authorized Signatory the within Bond in every particular and must be guaranteed in a manner acceptable to the Trustee. (e) The Initial Bond shall be in the form set forth in par�raplis (a) through d of this section, except for the following alterations: (i) immediately under the name of the Bond the heading "INTEREST RATE" and "MATURITY DATE" shall both be completed with the expression "As Shown Below," and the reference to the "CUSIP NUMBER" shall be deleted; (ii) in the first paragraph of the Bond, the words "on the Maturity Date, as specified above, the sum of DOLLARS" shall be deleted and the following will be inserted: "on September 1 in each of the years, in the principal installments and bearing interest at the per annum rates set forth in the following schedule: Years Principal Installments Interest Rates" (Information to be inserted from Section 3.2(b)); and 33 Res 14-45 Exhibit (iii) the Initial Bond shall be numbered T-1. Section 5.3. CUSIP Registration. The Town may secure identification numbers through the CUSIP Service Bureau Division of Standard & Poor's Corporation, New York, New York, and may authorize the printing of such numbers on the face of the Bonds. It is expressly provided, however, that the presence or absence of CUSIP numbers on the Bonds shall be of no significance or effect as regards the legality thereof and none of the Town, the attorneys approving said Bonds as to legality or the Trustee are to be held responsible for CUSIP numbers incorrectly printed on the Bonds. The Town prohibits any Bond to be issued in a denomination of less than $25,000 and further prohibits the assignment of a CUSIP number to any Bond with a denomination of less than $25,000, and any attempt to accomplish either of the foregoing shall be void and of no effect. The Trustee may include in any redemption notice a statement to the effect that the CUSIP numbers on the Bonds have been assigned by an independent service and are included in such notice solely for the convenience of the Bondholders and that neither the Town nor the Trustee shall be liable for any inaccuracies in such numbers. Section 5.4. Legal Opinion. The approving legal opinion of Bond Counsel may be printed on or attached to each Bond over the certification of the Town Secretary of the Town, which may be executed in facsimile. ARTICLE VI FUNDS AND ACCOUNTS Section 6.1. Establishment of Funds and Accounts. (a) Creation of Funds. The following Funds are hereby created and established under this Indenture: (i) Pledged Revenue Fund; (ii) Bond Fund; (iii) Project Fund; (iv) Reserve Fund; (v) Redemption Fund; (vi) Rebate Fund; (vii) Administrative Fund; 34 Res 14-45 Exhibit (viii) Reimbursement Fund; and (ix) Developer Property Tax Reserve Fund. (b) Creation of Accounts and Subaccounts. Bond Fund: (i) The following Accounts are hereby created and established under the (A) Capitalized Interest Account; and (B) Principal and Interest Account. (ii) The following Accounts are hereby created and established under the Reserve Fund: (A) Reserve Account; (B) Prepayment Reserve Account; and (C) Delinquency Reserve Account. (iii) The following Accounts are hereby created and established under the Project Fund: (A) Improvement Project A Improvement Account; (B) Developer Improvement Account; and (C) Costs of Issuance Account. (iv) The following Accounts are hereby created and established under the Pledged Revenue Fund: (A) Bond Pledged Revenue Account; and (B) Developer Reimbursement Pledged Revenue Account. (c) Each Fund, each Account and each Subaccount created within such Fund shall be maintained by the Trustee separate and apart from all other funds and accounts of the Town. The Pledged Funds shall constitute trust funds which shall be held in trust by the Trustee as part of the Trust Estate solely for the benefit of the Owners of the Bonds. Amounts on deposit in the Funds, Accounts and Subaccounts shall be used solely for the purposes set forth herein. (d) Interest earnings and profit on each respective Fund and Account established by this Indenture shall be applied or withdrawn for the purposes of such Fund or Account as specified below. 35 Res 14-45 Exhibit Section 6.2. Initial Deposits to Funds and Accounts. (a) The proceeds from the sale of the Bonds shall be paid to the Trustee and deposited or transferred by the Trustee as follows: (i) to the Capitalized Interest Account of the Bond Fund: $ ; (ii) to the Reserve Account of the Reserve Fund $ , which is equal to the initial Reserve Fund Requirement; (iii) to the Costs of Issuance Account of the Project Fund: $ ; and (iv) to the Improvement Project A Improvement Account of the Project Fund: (b) Funds received from the Developer or other sources on the Closing Date pursuant to the terms of the Reimbursement Agreement in the amount of $ shall be deposited to the Developer Improvement Account of the Project Fund. [(c) Funds received from the Developer on the Closing Date in the amount of $ shall be deposited to the Capitalized Interest Account of the Bond Fund.] (d) Funds received from the Developer on the Closing Date in the amount of $ (the "Initial Deposit", as defined by the Redemption Waiver Agreement) shall be deposited to the Developer Property Tax Reserve Fund. Section 6.3. Pledged Revenue Fund. (a) Immediately upon receipt thereof, the Town shall transfer to the Trustee for deposit to the Pledged Revenue Fund the Assessments and Annual Installments (other than the portion of the Assessments and Annual Installments allocated to the payment of Administrative Expenses and Delinquent Collection Costs, which shall be deposited to the Administrative Fund pursuant to Section 6.9 hereof), as set forth in the Service and Assessment Plan. Specifically, the City shall deposit or cause to be deposited the foregoing amounts as follows: (i) first, to the Bond Pledged Revenue Account of the Pledged Revenue Fund in an amount sufficient to pay debt service on the Bonds next coming due, (ii) second, to the Reserve Account of the Reserve Fund in an amount to cause the amount in the Reserve Account to equal the Reserve Fund Requirement, (iii) third to the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund to pay and reimburse the Developer for costs of Improvement Project A Improvements that have been paid from the Developer Improvement Account of the Project Fund (pursuant to the terms of the Reimbursement Agreement), (iv) fourth to pay other costs of the Authorized Improvements, and (v) fifth to pay other costs permitted by the PID Act. Moneys transferred to the Developer Reimbursement Pledged Revenue Account shall not be a part of the Trust Estate and are not security for the Bonds. (b) From time to time as needed to pay the obligations relating to the Bonds, but no later than five (5) Business Days before each Interest Payment Date, the Trustee shall withdraw from the Pledged Revenue Fund and transfer to the Principal and Interest Account of the Bond 36 Res 14-45 Exhibit Fund, an amount, taking into account any amounts then on deposit in such Principal and Interest Account and any expected transfers from the Capitalized Interest Account to the Principal and Interest Account, such that the amount on deposit in the Principal and Interest Account equals the principal (including any Sinking Fund Installments) and interest due on the Bonds on the next Interest Payment Date. (c) Subject to the provisions of the Reimbursement Agreement, from time to time as needed to pay the obligations relating to costs of Improvement Project A Improvements that are paid with funds withdrawn from the Developer Improvement Account of the Project Fund the Trustee shall withdraw from the Developer Reimbursement Pledged Revenue Account and transfer to the Reimbursement Fund such amount needed to reimburse the Developer for funds withdrawn from the Developer Improvement Account of the Project Fund used to fund costs of Improvement Project A Improvements. (c) If, after the foregoing transfers and any transfer from the Reserve Fund as provided in Section 6.7, there are insufficient funds to make the payments provided in paragraph (b) above, the Trustee shall apply the available funds in the Principal and Interest Account first to the payment of interest, then to the payment of principal (including any Sinking Fund Installments) on the Bonds. (d) The Trustee shall transfer Prepayments to the Redemption Fund promptly after deposit of such amounts into the Pledged Revenue Fund. (e) In accordance with instructions received from the Town, the Trustee shall transfer Foreclosure Proceeds relating to Assessments (excluding the portion of Assessments allocated to the payment of Administrative Expenses, as set forth in the Service and Assessment Plan) first to the Reserve Fund to restore any transfers from the Reserve Fund made with respect to the Improvement Area #1 Assessed Parcel(s), the Improvement Area #2 Assessed Parcel(s) and the Improvement Area #3 Assessed Parcel(s) to which the Foreclosure Proceeds relate, and second, to the Redemption Fund promptly after deposit of such amounts into the Pledged Revenue Fund. (f) After satisfaction of the requirement to provide for the payment of the principal and interest on the Bonds and to fund any deficiency that may exist in the Reserve Fund and to fund any obligations due to the Developer with funds deposited to the Reimbursement Fund, the Trustee shall transfer any Pledged Revenues remaining in the Pledged Revenue Fund to the Town, which monies may be used for any lawful purpose for which Assessments may be used under the PID Act. Section 6.4. Bond Fund. (a) On each Interest Payment Date, the Trustee shall withdraw from the Principal and Interest Account and transfer to the Paying Agent/Registrar the principal (including any Sinking Fund Installments) and interest then due and payable on the Bonds, less any amount to be used to pay interest on the Bonds on such Interest Payment Date from the Capitalized Interest Account as provided below. (b) If amounts in the Principal and Interest Account are insufficient for the purposes set forth in paragraph (a) above, the Trustee shall withdraw from the Reserve Fund amounts to 37 Res 14-45 Exhibit cover the amount of such insufficiency. Amounts so withdrawn from the Reserve Fund shall be deposited in the Principal and Interest Account and transferred to the Paying Agent/Registrar. (c) Moneys in the Capitalized Interest Account shall be used for the payment of all interest due on the Bonds on [March 1, 2015 and September 1, 2015 and % of the interest due on March 1, 2016]. Any amounts on deposit to the Capitalized Interest Account after the payment of interest on the dates and in the amounts listed above shall be transferred to the Project Fund, or if the Project Fund has been closed as provided in Section 6.5(d), such amounts shall be transferred to the Redemption Fund to be used to redeem Bonds and the Capitalized Interest Account shall be closed. Section 6.5. Project Fund. (a) Money on deposit in the Project Fund shall be used for the purposes specified in Section 3.1. (b) Disbursements from the Costs of Issuance Account of the Project Fund shall be made by the Trustee to pay costs of issuance of the Bonds pursuant to one or more Town Certificates. Disbursements from all other Accounts of the Project Fund to pay Costs shall be made by the Trustee upon receipt by the Trustee of a properly executed and completed Certification for Payment. The disbursement of funds from the Project Fund pursuant to a Certification for Payment shall be pursuant to and accordance with the disbursement procedures described in the Financing Agreement. Each such Town Certificate shall include a list of the payees and the payments (not to exceed) to be made to such payees as well as a statement that all payments shall be made by check or wire transfer in accordance with the payment instructions set forth in such written request or in the invoices submitted in accordance therewith and the Trustee may rely on such payment instructions though given by the Town with no duty to investigate or inquire as to the authenticity of or authorization for the invoice or the payment instructions contained therein. (c) Except as provided in Section 6.5(d) and (f), money on deposit in the Improvement Project A Improvement Account shall be used solely to pay Costs. (d) If the Town Representative determines in his or her sole discretion that amounts then on deposit in the Project Fund are not expected to be expended for purposes of the Project Fund due to the abandonment, or constructive abandonment, of one or more of the Improvement Project A Improvements such that, in the opinion of the Town Representative, it is unlikely that the amounts in the Project Fund will ever be expended for the purposes of the Project Fund, the Town Representative shall file a Town Certificate with the Trustee which identifies the amounts then on deposit in the Project Fund that are not expected to be used for purposes of the Project Fund. If such Town Certificate is so filed, the amounts on deposit in the Project Fund shall be transferred to the Redemption Fund to redeem Bonds on the earliest practicable date after notice of redemption has been provided in accordance with this Indenture. Upon such transfers, the Project Fund shall be closed. (e) In making any determination pursuant to this Section, the Town Representative may conclusively rely upon a certificate of an Independent Financial Consultant. Res 14-45 Exhibit (f) Upon the filing of a Town Certificate stating that all Improvement Project A Improvements have been completed and that all Costs have been paid, or that any Costs are not required to be paid from the Project Fund pursuant to a Certification for Payment, the Trustee shall transfer the amount, if any, remaining within the Project Fund to the Bond Fund or to the Redemption Fund as directed by the Town Representative in a Town Certificate filed with the Trustee and shall transfer any remaining amount in the Developer Improvement Account of the Project Fund to the Developer. Upon such transfers, the Project Fund shall be closed. (g) Upon a determination by the Town Representative that all costs of issuance of the Bonds have been paid, any amounts remaining in the Costs of Issuance Account shall be transferred to another Account or Subaccount in the Project Fund and used to pay Costs or to the Principal and Interest Account and used to pay interest on the Bonds, as directed in a Town Certificate filed with the Trustee. Section 6.6. Redemption Fund. The Trustee shall cause to be deposited to the Redemption Fund from the Pledged Revenue Fund an amount sufficient to redeem Bonds as provided in Sections 4.3 and 4.4 on the dates specified for redemption as provided in Sections 4.3 and 4.4. Amounts on deposit in the Redemption Fund shall be used and withdrawn by the Trustee to redeem Bonds as provided in Article IV. Section 6.7. Reserve Fund. (a) The Town agrees with the Owners of the Bonds to accumulate and, when accumulated, maintain in the Reserve Account of the Reserve Fund, an amount equal to not less than the Reserve Fund Requirement. All amounts deposited in the Reserve Account of the Reserve Fund shall be used and withdrawn by the Trustee for the purpose of making transfers to the Principal and Interest Account of the Bond Fund as provided in this Indenture. The Trustee will transfer from the Pledged Revenue Fund to the Prepayment Reserve Account on March 1 and September 1 of each year, commencing , 20_, an amount equal to 0.20% of the interest rate component of the Annual Installments in the Prepayment Reserve Account until the Prepayment Reserve Requirement has accumulated in the Prepayment Reserve Account. Once the Prepayment Reserve Requirement has accumulated in the Prepayment Reserve Account, such 0.20% of the interest rate component of the Annual Installments will be deposited into the Delinquency Reserve Account until the Delinquency Reserve Requirement has been accumulated in the Delinquency Reserve Account; provided, however, that at any time the amount on deposit in the Prepayment Reserve Account is less than Prepayment Reserve Requirement, the Trustee shall resume depositing such 0.20% into the Prepayment Reserve Account until the Prepayment Reserve Requirement has accumulated in the Prepayment Reserve Account. Furthermore, once the Prepayment Reserve Requirement has accumulated in the Prepayment Reserve Account, any amounts in excess of the Prepayment Reserve Requirement shall be transferred by the Trustee first to the Delinquency Reserve Account in the event such account contains less than the Delinquency Reserve Requirement, or, if the Delinquency Reserve Account contains the Delinquency Reserve Requirement, then to the Redemption Fund to redeem Bonds as provided in Article IV. In addition, the Trustee shall deposit from the Pledged Revenue Fund to the Delinquency Reserve Account on March 1 and September 1, commencing 20_, an amount equal to 0.30% of the interest rate component of the Annual 39 Res 14-45 Exhibit Installments. Once the Delinquency Reserve Requirement has been accumulated in the Delinquency Reserve Account, any amounts in excess of the Delinquency Reserve Requirement in the Delinquency Reserve Account shall be transferred by the Trustee to the Redemption Fund to redeem Bonds as provided in Article IV; provided, however, that at any time the amount on deposit in the Delinquency Reserve Account is less than Delinquency Reserve Requirement, the Trustee shall resume depositing such 0.30% into the Delinquency Reserve Account until the Delinquency Reserve Requirement has accumulated in the Delinquency Reserve Account. In calculating the amounts to be transferred pursuant to this Section, the Trustee may conclusively rely on the Annual Installments as shown on the Assessment Roll in the Service and Assessment Plan unless it receives a Town Order specifying that a different amount be used. (b) Whenever a transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Trustee shall provide written notice thereof to the Town, specifying the amount withdrawn and the source of said funds. (c) In the event of an extraordinary optional redemption of Bonds from the proceeds of a Prepayment pursuant to Section 4.4, the Trustee, pursuant to written directions from the Town, shall transfer from the Reserve Account of the Reserve Fund to the Redemption Fund the amount specified in such directions, which shall be an amount equal to the principal amount of Bonds to be redeemed multiplied by the lesser of. (i) the amount required to be in the Reserve Account of the Reserve Fund divided by the principal amount of Outstanding Bonds prior to the redemption, and (ii) the amount actually in the Reserve Account of the Reserve Fund divided by the principal amount of Outstanding Bonds prior to the redemption. If after such transfer, and after applying investment earnings on the Prepayment toward payment of accrued interest, there are insufficient funds to pay the principal amount plus accrued and unpaid interest on such Bonds to the date fixed for redemption of the Bonds to be redeemed as a result of such Prepayment, the Trustee shall transfer an amount equal to the shortfall from the Prepayment Reserve Account to the Redemption Fund to be applied to the redemption of the Bonds. (d) Whenever, on any Interest Payment Date, or on any other date at the request of a Town Representative, the value of cash and Value of Investment Securities on deposit in the Reserve Account exceeds the Reserve Fund Requirement, the Trustee shall provide written notice to the Town Representative of the amount of the excess. Such excess shall be transferred to the Principal and Interest Account to be used for the payment of interest on the Bonds on the next Interest Payment Date in accordance with Section 6.4, unless within thirty days of such notice to the Town Representative, the Trustee receives a Town Order instructing the Trustee to apply such excess: (i) to pay amounts due under Section 6.8 hereof, (ii) to the Administrative Fund in an amount not more than the Administrative Expenses for the Bonds or (iii) to the Project Fund to pay Costs if such application and the expenditure of funds is expected to occur within three years of the date hereof. (e) Whenever, on any Interest Payment Date, or on any other date at the written request of the Town Representative, the amount in the Prepayment Reserve Account exceeds the Prepayment Reserve Requirement, the Trustee shall provide written notice to the Town of the amount of the excess, and the Trustee shall transfer such excess to the Pledged Revenue Fund. (f) Whenever, on any Interest Payment Date, or on any other date at the written request of the Town Representative, the amount in the Delinquency Reserve Account exceeds 40 Res 14-45 Exhibit the Delinquency Reserve Requirement, the Trustee shall provide written notice to the Town of the amount of the excess, and the Trustee shall transfer such excess to the Pledged Revenue Fund. (g) Whenever, on any Interest Payment Date, the amount on deposit in the Bond Fund is insufficient to pay the debt service on the Bonds Similarly Secured due on such date, the Trustee shall transfer first from the Delinquency Reserve Account of the Reserve Fund, second from the Reserve Account of the Reserve Fund and third from the Prepayment Reserve Account to the Bond Fund the amounts necessary to cure such deficiency. (h) At the final maturity of the Bonds Similarly Secured, the amount on deposit in the Reserve Account, the Prepayment Reserve Account and the Delinquency Reserve Account shall be transferred to the Redemption Fund and applied to the payment of the principal of the Bonds Similarly Secured. (i) If, after a Reserve Account withdrawal, the amount on deposit in the Reserve Account is less than the Reserve Fund Requirement, the Trustee shall transfer from the Pledged Revenue Fund to the Reserve Account the amount of such deficiency, but only to the extent that such amount is not required for the timely payment of principal, interest, or Sinking Fund Installments. 0) If the amount held in the Reserve Fund together with the amount held in the Pledged Revenue Fund, the Bond Fund and Redemption Fund is sufficient to pay the principal amount and of all Outstanding Bonds Similarly Secured on the next date the Bonds Similarly Secured may be optionally redeemed by the Town at a redemption price of par, together with the unpaid interest accrued on such Bonds Similarly Secured as of such date, the moneys shall be transferred to the Redemption Fund and thereafter used to redeem all Bonds Similarly Secured on such date. Section 6.8. Rebate Fund: Rebatable Arbitrage. (a) The Rebate Fund is to be held by the Trustee in accordance with the terms and provisions of this Indenture. Amounts on deposit in the Rebate Fund shall be used solely for the purpose of paying amounts due the United States Government in accordance with the Code. The Rebate Fund shall not be part of the Trust Estate and shall not be security for the Bonds. (b) In order to assure that Rebatable Arbitrage is paid to the United States rather than to a third party, investments of funds on deposit in the Rebate Fund shall be made in accordance with the Code and the Tax Certificate. (c) The Trustee conclusively shall be deemed to have complied with the provisions of this Section and shall not be liable or responsible if it follows the instructions of the Town and shall not be required to take any action under this Section in the absence of instructions from the Town. (d) If, on the date of each annual calculation, the amount on deposit in the Rebate Fund exceeds the amount of the Rebatable Arbitrage, the Town may direct the Trustee, pursuant to a Town Order, to transfer the amount in excess of the Rebatable Arbitrage to the Bond Fund. 41 Res 14-45 Exhibit Section 6.9. Administrative Fund. (a) Immediately upon receipt thereof, the Town shall deposit or cause to be deposited to the Administrative Fund the portion of the Assessments and Annual Installments allocated to the payment of Administrative Expenses and Delinquent Collection Costs, as set forth in the Service and Assessment Plan. (b) Moneys in the Administrative Fund shall be held by the Trustee separate and apart from the other Funds created and administered hereunder and used as directed by a Town Order solely for the purposes set forth in the Service and Assessment Plan, including payment of Administrative Expenses and Delinquent Collection Costs. The Administrative Fund shall not be part of the Trust Estate and shall not be security for the Bonds. Section 6.10. Developer Property Tax Reserve Fund. (a) The Developer shall deposit or cause to be deposited the Initial Deposit into the Developer Property Tax Reserve Fund on or prior to the issuance of the Bonds. Prior to the Developer Property Tax Reserve Fund Release Date, and upon receipt by the Trustee of a Town Order specifying (1) the amount to be transferred and that such amount is equal to all outstanding Developer Property Tax Delinquency Amounts and (2) the dates on which such transfer shall be made, funds deposited in the Developer Property Tax Reserve Fund shall be transferred by the Trustee in an aggregate amount equal to all outstanding Developer Property Tax Delinquency Amounts to the Town for payment of the related unpaid delinquent ad valorem taxes levied by any taxing entity on any property located in Improvement Area #1, Improvement Area #2 and Improvement Area #3 and any penalties, costs and interest related thereto. The Town shall use amounts received by the Trustee from the Developer Property Tax Reserve Fund solely for payment of outstanding Developer Property Tax Delinquency Amounts and any penalties, costs and interest related thereto, all in accordance with the Redemption Waiver Agreement. Prior to the Developer Property Tax Reserve Fund Release Date, upon any transfer of funds deposited in the Developer Property Tax Reserve Fund to the Town in accordance with this clause (a), the Developer shall deposit or cause to be deposited an equivalent amount of funds into the Developer Property Tax Reserve Fund to replenish such Fund, all in accordance with the Redemption Waiver Agreement. (b) Any amounts deposited in the Developer Property Tax Reserve Fund shall be released to the Developer, except during the occurrence of an ongoing current Event of Default, on or after March 1 of the first year after the tax year in which no property located in Improvement Area #1, Improvement Area #2 and Improvement Area #3 is subject to an agriculture valuation for purposes of ad valorem taxes levied by any taxing entity. Such amounts shall be released only upon the filing of evidence satisfactory to the Town of payment of all ad valorem taxes due and owing with respect to property located in Improvement Area #1, Improvement Area #2 and Improvement Area #3 subject to an agriculture valuation. The Town shall provide the Trustee with a Town Certificate to this effect, upon which the Trustee may conclusively rely. At such time as the condition for release is met, any amounts deposited in the Developer Property Tax Reserve Fund shall be irrevocably and unconditionally released to the Developer, 42 Res 14-45 Exhibit or to the Developer's successors and assigns or designees as identified in a written notice from the Developer to the Trustee and the Town. The Town and the Trustee shall solely and conclusively rely as to payment of amounts released from the Developer Property Tax Reserve Fund on any such written notice from the Developer as to their successors and assigns or designees. The Town shall provide written notice of the release to the Trustee and Developer, or to the Developer's successors and assigns. Section 6.11. Investment of Funds. (a) Money in any Fund or Account, other than the Reserve Account, shall be invested by the Trustee as directed by the Town pursuant to a Town Order filed with the Trustee in Investment Securities; provided that all such deposits and investments shall be made in such manner that the money required to be expended from any Fund or Account will be available at the proper time or times. Money in the Reserve Account shall be invested in such Investment Securities as directed by the Town pursuant to a Town Order filed with the Trustee, provided that the final maturity of any individual Investment Security shall not exceed 270 days and the average weighted maturity of any investment pool or no-load money market mutual fund shall not exceed 90 days. Each such Town Order shall be a certification that the investment directed therein constitutes an Investment Security. Such investments shall be valued each year in terms of the Value of Investment Securities as of September 30. For purposes of maximizing investment returns, to the extent permitted by law, money in the Funds and Accounts may be invested in common investments of the kind described above, or in a common pool of such investment which shall be kept and held at an official depository bank, which shall not be deemed to be or constitute a commingling of such money or funds provided that safekeeping receipts or certificates of participation clearly evidencing the investment or investment pool in which such money is invested and the share thereof purchased with such money or owned by such Fund or Account are held by or on behalf of each such Fund or Account. If necessary, such investments shall be promptly sold to prevent any default. To ensure that cash on hand is invested, if the Town does not give the Trustee written or timely instructions with respect to investments of funds, the Trustee may invest cash balances in a no-load money market mutual fund permitted by Section 2256.014 of the Texas Government Code, so long as such money market fund is a qualified fund under the definition of Investment Securities. (b) Obligations purchased as an investment of moneys in any Fund or Account shall be deemed to be part of such Fund or Account, subject, however, to the requirements of this Indenture for transfer of interest earnings and profits resulting from investment of amounts in Funds and Accounts. Whenever in this Indenture any moneys are required to be transferred by the Town to the Trustee, such transfer may be accomplished by transferring a like amount of Investment Securities. (c) The Trustee and its affiliates may act as sponsor, advisor, depository, principal or agent in the acquisition or disposition of any investment. The Trustee shall not incur any liability for losses arising from any investments made pursuant to this Section. The Trustee shall not be required to determine the legality of any investments. (d) Investments in any and all Funds and Accounts may be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular Funds or Accounts of 43 Res 14-45 Exhibit amounts received or held by the Trustee hereunder, provided that the Trustee shall at all times account for such investments strictly in accordance with the Funds and Accounts to which they are credited and otherwise as provided in this Indenture. (e) The Trustee will furnish the Town periodic cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the Town. Upon the Town's election, such statements will be delivered via the Trustee's online service and upon electing such service, paper statements will be provided only upon request. The Town waives the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur, to the extent permitted by law. The Town further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker. Section 6.12. Security of Funds. All Funds heretofore created or reaffirmed, to the extent not invested as herein permitted, shall be secured in the manner and to the fullest extent required by law for the security of public funds, and such Funds shall be used only for the purposes and in the manner permitted or required by this Indenture. Section 6.13 Reimbursement Fund. Money on deposit in the Reimbursement Fund shall be used to reimburse the Developer for funds withdrawn from the Developer Improvement Account of the Project Fund and used to pay costs of Improvement Project A Improvements as provided in the Reimbursement Agreement. When all amounts due to the Developer to reimburse it for the funds withdrawn from the Developer Improvement Account of the Project Fund have been paid to the Developer, whether through Assessments received and applied in accordance with the Service and Assessment Plan or an Annual Service Plan Update or through the proceeds of Additional Bonds, no further deposits shall be made to the Reimbursement Fund and the Reimbursement Fund shall be closed. ARTICLE VII COVENANTS Section 7.1. Confirmation of Assessments. The Town hereby confirms, covenants, and agrees that, in the Assessment Ordinance, it has levied the Assessments against the respective Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels from which the Assessment Revenues will be collected and received. Res 14-45 Exhibit Section 7.2. Collection and Enforcement of Assessments. (a) For so long as any Bonds are Outstanding and amounts are due to the Developer under the Reimbursement Agreement to reimburse it for its funds it has contributed to pay Costs of the Improvement Project A Improvements, the Town covenants, agrees and warrants that it will take and pursue all reasonable actions pemissib 1 e under Applicable Laws to cause the Assessments to be collected and the liens thereof enforced continuously, in the manner and to the maximum extent permitted by Applicable Laws, and to cause no reduction, abatement or exemption in the Assessments. (b) To the extent permitted by law, notice of the Annual Installments shall be sent by, or on behalf of, the Town to the affected property owners on the same statement or such other mechanism that is used by the Town, so that such Annual Installments are collected simultaneously with ad valorem taxes and shall be subject to the same penalties, procedures, and foreclosure sale in case of delinquencies as are provided for ad valorem taxes of the Town. (c) The Town will determine or cause to be determined, no later than February 15 of each year, whether or not any Annual Installment is delinquent and, if such delinquencies exist, the Town will order and cause to be commenced as soon as practicable any and all appropriate and legally permissible actions to obtain such Annual Installment, and any delinquent charges and interest thereon, including diligently prosecuting an action in district court to foreclose the currently delinquent Annual Installment. Notwithstanding the foregoing, the Town shall not be required under any circumstances to purchase or make payment for the purchase of the delinquent Assessments or the corresponding Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel. (d) The Town shall not be required under any circumstances to expend any funds for Delinquent Collection Costs or Administrative Expenses in connection with its covenants and agreements under this Section or otherwise other than funds on deposit in the Administrative Fund. Section 7.3. Against Encumbrances. (a) The Town shall not create and, to the extent Pledged Revenues are received, shall not suffer to remain, any lien, encumbrance or charge upon the Pledged Revenues or upon any other property pledged under this Indenture, except the pledge created for the security of the Bonds Similarly Secured, and other than a lien or pledge subordinate to the lien and pledge of such property related to the Bonds Similarly Secured. (b) So long as Bonds Similarly Secured are Outstanding hereunder or under any indenture relating to any Additional Bonds, the Town shall not issue any bonds, notes or other evidences of indebtedness, other than the Bonds and Additional Bonds, secured by any pledge of or other lien or charge on the Pledged Revenues or other property pledged under this Indenture or under any indenture relating to any Additional Bonds, other than a lien or pledge subordinate to the lien and pledge of such property related to the Bonds Similarly Secured. 45 Res 14-45 Exhibit Section 7.4. Records, Accounts, Accounting Reports. The Town hereby covenants and agrees that so long as any Bonds are Outstanding and amounts are due to the Developer under the Reimbursement Agreement to reimburse it for its funds it has contributed to pay Costs of the Improvement Project A Improvements, it will keep and maintain a proper and complete system of records and accounts pertaining to the Assessments. The Trustee and holder or holders of any Bonds or any duly authorized agent or agents of such holders shall have the right at all reasonable times to inspect all such records, accounts, and data relating thereto, upon written request to the Town by the Trustee or duly authorized representative, as applicable. The Town shall provide the Trustee or duly authorized representative, as applicable, an opportunity to inspect such books and records relating to the Bonds during the Town's regular business hours and on a mutually agreeable date not later than thirty days after the Town receives such request. Section 7.5. Covenants Regarding Tax Exemption of Interest on Bonds. (a) The Town covenants to take any action necessary to assure, or refrain from any action that would adversely affect, the treatment of the Bonds as an obligation described in section 103 of the Code, the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Town covenants as follows: (1) to take any action to assure that no more than 10 percent of the proceeds of the Bonds (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the Town, with respect to such private business use, do not, under the terms of this Article or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code; (2) to take any action to assure that in the event that the "private business use" described in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" that is "related" and not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental use; (3) to take any action to assure that no amount that is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (4) to refrain from taking any action that would otherwise result in the Bonds being treated as a "private activity bond" within the meaning of section 141(b) of the Code; we Res 14-45 Exhibit (5) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (6) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds that were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) that produces a materially higher yield over the term of the Bonds, other than investment property acquired with — (A) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less or, in the case of an advance refunding bond, for a period of 30 days or less until such proceeds are needed for the purpose for which the Bonds is issued, and in the case of a current refunding bond, for a period of 90 days or less, (B) amounts invested in a bona fide debt service fund, within the meaning of section 1.148-1(b) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Bonds; (7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds does not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and (8) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Bonds has been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code. (b) In order to facilitate compliance with the above covenant (a)(8), the Rebate Fund is established by the Town pursuant to Section 6.1 for the sole benefit of the United States of America, and such Rebate Fund shall not be subject to the claim of any other person, including without limitation the Registered Owner. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (c) The Town understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the Town that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto (the "Treasury Regulations"). In the event that regulations or rulings are hereafter promulgated that modify or expand provisions of the Code, as applicable to the Bonds, the Town will not be required to comply with any covenant contained herein to the 47 Res 14-45 Exhibit extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated that impose additional requirements applicable to the Bonds, the Town agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of such intention, the Town hereby authorizes and directs the Mayor to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Town, that may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. (d) The Town covenants to account for the expenditure of sale proceeds and investment earnings to be used for Costs on its books and records in accordance with the requirements of the Code. The Town recognizes that in order for the proceeds to be considered used for the reimbursement of costs, the proceeds must be allocated to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Improvement Project A Improvements are completed; but in no event later than three years after the date on which the original expenditure is paid. The foregoing notwithstanding, the Town recognizes that in order for proceeds to be expended under the Code, the sale proceeds or investment earnings must be expended no more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds is retired. The Town agrees to obtain the advice of nationally - recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Bonds. For purposes hereof, the Town shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (e) The Town covenants that the projects funded with the proceeds of the Bonds will not be sold or otherwise disposed in a transaction resulting in the receipt by the Town of cash or other compensation, unless the Town obtains an opinion of nationally -recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Town shall not be obligated to comply with this covenant if it obtains a legal opinion that such failure to comply will not adversely affect the excludability for federal income tax proposes from gross income of the interest. ARTICLE VIII LIABILITY OF TOWN Section 8.1. Liability of Town. (a) Neither the full faith and credit nor the general taxing power of the Town is pledged to the payment of the Bonds, and no Town taxes, fee or revenues from any source are pledged to the payment of, or available to pay any portion of, the Bonds or any other obligations relating to the District. The Town shall never be liable for any obligations relating to the Bonds Res 14-45 Exhibit or other obligations relating to the District, other than as specifically provided for in this Indenture. (b) The Town shall not incur any responsibility in respect of the Bonds or this Indenture other than in connection with the duties or obligations explicitly herein or in the Bonds assigned to or imposed upon it. The Town shall not be liable in connection with the performance of its duties hereunder, except for its own willful default or act of bad faith. The Town shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions covenants or agreements of the Trustee herein or of any of the documents executed by the Trustee in connection with the Bonds, or as to the existence of a default or event of default thereunder. (c) In the absence of bad faith, the Town may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Town and conforming to the requirements of this Indenture. The Town shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts. (d) No provision of this Indenture, the Bonds, the Assessment Ordinance, or any agreement, document, instrument, or certificate executed, delivered or approved in connection with the issuance, sale, delivery, or administration of the Bonds (collectively, the "Bond Documents"), shall require the Town to expend or risk its own general funds or other funds or otherwise incur any financial liability (other than with respect to the Pledged Revenues) in the performance of any of its obligations hereunder, or in the exercise of any of its rights or powers, if in the judgment of the Town there are reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it. (e) Neither the Owners nor any other Person shall have any claim against the Town or any of its officers, officials, agents, or employees for damages suffered as a result of the Town's failure to perform in any respect any covenant, undertaking, or obligation under any Bond Documents or as a result of the incorrectness of any representation in, or omission from, any of the Bond Documents, except to the extent that any such claim relates to an obligation, undertaking, representation, or covenant of the Town, in accordance with the Bond Documents and the PID Act. Any such claim shall be payable only from Pledged Revenues. Nothing contained in any of the Bond Documents shall be construed to preclude any action or proceeding in any court or before any governmental body, agency, or instrumentality against the Town or any of its officers, officials, agents, or employees to enforce the provisions of any of the Bond Documents or to enforce all rights of the Owners of the Bonds by mandamus or other proceeding at law or in equity. (f) The Town may rely on and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Town may consult with counsel with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. Whenever in the administration of its duties under this Indenture the Town shall deem it necessary or desirable that a matter be proved or established prior to taking or 49 Res 14-45 Exhibit suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Town, be deemed to be conclusively proved and established by a certificate of the Trustee, an Independent Financial Consultant, an independent inspector or Town Manager or other person designated by the Town Council to so act on behalf of the Town, and such certificate shall be full warrant to the Town for any action taken or suffered under the provisions of this Indenture upon the faith thereof, but in its discretion the Town may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may deem reasonable. (g) In order to perform its duties and obligations hereunder, the Town may employ such persons or entities as it deems necessary or advisable. The Town shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations, and directions of such persons or entities. ARTICLE IX THE TRUSTEE Section 9.1. Acceptance of Trust; Trustee as Registrar and Paying Agent. (a) The Trustee accepts and agrees to execute the respective trusts imposed upon it by this Indenture, but only upon the terms and conditions and subject to the provisions of this Indenture to all of which the parties hereto and the respective Owners of the Bonds agree. (b) The Trustee is hereby designated and agrees to act as Paying Agent/Registrar for and in respect to the Bonds. Section 9.2. Trustee Entitled to Indemnity. The Trustee shall be under no obligation to institute any suit, or to undertake any proceeding under this Indenture, or to enter any appearance or in any way defend in any suit in which it may be made defendant, or to take any steps in the execution of the trusts hereby created or in the enforcement of any rights and powers hereunder, until it shall be indemnified to its satisfaction by the Owners against any and all costs and expenses, outlays, and counsel fees and other reasonable disbursements, and against all liability except as a consequence of its own negligence or willful misconduct; provided, however, that in no event shall the Trustee request or require indemnification as a condition to making any deposits, payments or transfers when required hereunder, or to deliver any notice when required hereunder. Nevertheless, the Trustee may begin suit, or appear in and defend suit, or do anything else in its judgment proper to be done by it as the Trustee, without indemnity, and in such case the Trustee may make transfers from the Pledged Revenue Fund and Administrative Fund to pay all costs and expenses, outlays, and counsel fees and other reasonable disbursements properly incurred in connection therewith and shall be entitled to a preference therefor over any Bonds Outstanding hereunder. 50 Res 14-45 Exhibit Section 9.3. Responsibilities of the Trustee. (a) The recitals contained in this Indenture and in the Bonds shall be taken as the statements of the Town and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Indenture or the Bonds or with respect to the security afforded by this Indenture, and the Trustee shall incur no liability with respect thereto. Except as otherwise expressly provided in this Indenture, the Trustee shall have no responsibility or duty with respect to: (i) the issuance of Bonds for value; (ii) the application of the proceeds thereof, except to the extent that such proceeds are received by it in its capacity as Trustee; (iii) the application of any moneys paid to the Town or others in accordance with this Indenture, except as to the application of any moneys paid to it in its capacity as Trustee; or (iv) any calculation of arbitrage or rebate under the Code. (b) The duties and obligations of the Trustee shall be determined by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture. (c) The Trustee shall not be liable for any action taken or omitted by it in the performance of its duties under this Indenture, except for its own negligence or willful misconduct. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from this Indenture for the existence, furnishing or use of the Project. Section 9.4. Property Held in Trust. All moneys and securities held by the Trustee at any time pursuant to the terms of this Indenture shall be held by the Trustee in trust for the purposes and under the terms and conditions of this Indenture. Section 9.5. Trustee Protected in Relying on Certain Documents. (a) The Trustee may rely upon any order, notice, request, consent, waiver, certificate, statement, affidavit, requisition, bond, or other document provided to the Trustee in accordance with the terms of this Indenture that it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper board or Person or to have been prepared and furnished pursuant to any of the provisions of this Indenture, or upon the written opinion of any counsel, architect, engineer, insurance consultant, management consultant, or accountant believed by the Trustee to be qualified in relation to the subject matter, and the Trustee shall be under no duty to make any investigation or inquiry into any statements contained or matters referred to in any such instrument. Subject to Section 9.1 and 9.3, the Trustee may consult with counsel selected by the Trustee with due care, who may or may not be Bond Counsel, and any advice from such counsel with respect to compliance with the provisions of this Indenture shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder, reasonably and in good faith, in accordance with such advice. (b) Whenever the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under this Indenture, such matter may be 51 Res 14-45 Exhibit deemed to be conclusively proved and established by a Town Certificate, unless other evidence in respect thereof be hereby specifically prescribed. Such Town Certificate shall be full warrant for any action taken or suffered in good faith under the provisions hereof, but in its discretion the Trustee may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evidence as it may deem reasonable. Except as otherwise expressly provided herein, any request, order, notice, or other direction required or permitted to be furnished pursuant to any provision hereof by the Town to the Trustee shall be sufficiently executed if executed in the name of the Town by the Town Representative. (c) The Trustee shall not be under any obligation to see to the recording or filing of this Indenture, or otherwise to the giving to any Person of notice of the provisions hereof except as expressly required in Section 9.13. Section 9.6. Compensation. Unless otherwise provided by contract with the Trustee, the Trustee shall transfer from the Administrative Fund, from time to time, reasonable compensation for all services rendered by it hereunder, including its services as Paying Agent/Registrar, together with all its reasonable expenses, charges, and other disbursements and those of its counsel, agents and employees, incurred in and about the administration and execution of the trusts hereby created and the exercise of its powers and the performance of its duties hereunder, all pursuant to a Town Order and subject to any limit on the amount of such compensation or recovery of expenses or other charges as shall be prescribed by such Town Order, and the Trustee shall have a lien therefor on any and all funds at any time held by it hereunder prior to any Bonds Outstanding. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if in the judgment of the Trustee there are reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it. If the Town shall fail to make any payment required by this Section, the Trustee may make such payment from any moneys in its possession under the provisions of this Indenture and shall be entitled to a preference therefor over any Bonds Outstanding hereunder. Section 9.7. Permitted Acts. The Trustee and its directors, officers, employees, or agents may become the owner of or may in good faith buy, sell, own, hold and deal in Bonds and may join in any action that any Owner of Bonds may be entitled to take as fully and with the same rights as if it were not the Trustee. The Trustee may act as depository, and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, the Town or any committee formed to protect the rights of holders of Bonds or to effect or aid in any reorganization growing out of the enforcement of the Bonds or this Indenture, whether or not such committee shall represent the holders of a majority of the Bonds. Section 9.8. Resignation of Trustee. The Trustee may at any time resign and be discharged of its duties and obligations hereunder by giving not fewer than 60 days' notice, specifying the date when such resignation shall take effect, to the Town and each Owner of any Outstanding Bond. Such resignation shall 52 Res 14-45 Exhibit take effect upon the appointment of a successor as provided in Section 9.10 and the acceptance of such appointment by such successor. Section 9.9. Removal of Trustee. The Trustee may be removed at any time by (i) the Owners of at least a majority of the Bonds by an instrument or concurrent instruments in writing signed and acknowledged by such Owners or by their attorneys -in -fact, duly authorized and delivered to the Town, or (ii) so long as the Town is not in default under this Indenture, the Town. Copies of each such instrument shall be delivered by the Town to the Trustee and any successor thereof. The Trustee may also be removed at any time for any breach of trust or for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any provision of this Indenture with respect to the duties and obligations of the Trustee by any court of competent jurisdiction upon the application of the Town or the Owners of not less than 10% of the Bonds. Section 9.10. Successor Trustee. (a) If the Trustee shall resign, be removed, be dissolved, or become incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a receiver, liquidator, or conservator of the Trustee or of its property shall be appointed, or if any public officer shall take charge or control of the Trustee or of its property or affairs, the position of the Trustee hereunder shall thereupon become vacant. (b) If the position of Trustee shall become vacant for any of the foregoing reasons or for any other reason, a successor Trustee may be appointed within one year after any such vacancy shall have occurred by the Owners of at least 25% of the Bonds by an instrument or concurrent instruments in writing signed and acknowledged by such Owners or their attorneys - in -fact, duly authorized and delivered to such successor Trustee, with notification thereof being given to the predecessor Trustee and the Town. (c) Until such successor Trustee shall have been appointed by the Owners of the Bonds, the Town shall forthwith appoint a Trustee to act hereunder. Copies of any instrument of the Town providing for any such appointment shall be delivered by the Town to the Trustee so appointed. The Town shall mail notice of any such appointment to each Owner of any Outstanding Bonds within 30 days after such appointment. Any appointment of a successor Trustee made by the Town immediately and without further act shall be superseded and revoked by an appointment subsequently made by the Owners of Bonds. (c) If in a proper case no appointment of a successor Trustee shall be made within 45 days after the giving by any Trustee of any notice of resignation in accordance with Section 9.8 or after the occurrence of any other event requiring or authorizing such appointment, the Trustee or any Owner of Bonds may apply to any court of competent jurisdiction for the appointment of such a successor, and the court may thereupon, after such notice, if any, as the court may deem proper, appoint such successor and the Town shall be responsible for the costs of such appointment process. (e) Any successor Trustee appointed under the provisions of this Section shall be a commercial bank or trust company or national banking association (i) having a capital and 53 Res 14-45 Exhibit surplus and undivided profits aggregating at least $50,000,000, if there be such a commercial bank or trust company or national banking association willing and able to accept the appointment on reasonable and customary terms, and (ii) authorized by law to perform all the duties of the Trustee required by this Indenture. (f) Each successor Trustee shall mail, in accordance with the provisions of the Bonds, notice of its appointment to the Trustee, any rating agency which, at the time of such appointment, is providing a rating on the Bonds and each of the Owners of the Bonds. Section 9.11. Transfer of Rights and Property to Successor Trustee. Any successor Trustee appointed under the provisions of Section 9.10 shall execute, acknowledge, and deliver to its predecessor and the Town an instrument in writing accepting such appointment, and thereupon such successor, without any further act, deed, or conveyance, shall become fully vested with all moneys, estates, properties, rights, immunities, powers, duties, obligations, and trusts of its predecessor hereunder, with like effect as if originally appointed as Trustee. However, the Trustee then ceasing to act shall nevertheless, on request of the Town or of such successor, execute, acknowledge, and deliver such instruments of conveyance and further assurance and do such other things as may reasonably be required for more fully and certainly vesting and confirming in such successor all the rights, immunities, powers, and trusts of such Trustee and all the right, title, and interest of such Trustee in and to the Trust Estate, and shall pay over, assign, and deliver to such successor any moneys or other properties subject to the trusts and conditions herein set forth. Should any deed, conveyance, or instrument in writing from the Town be required by such successor for more fully and certainly vesting in and confirming to it any such moneys, estates, properties, rights, powers, duties, or obligations, any and all such deeds, conveyances, and instruments in writing, on request and so far as may be authorized by law, shall be executed, acknowledged, and delivered by the Town. Section 9.12. Merger, Conversion or Consolidation of Trustee. Any corporation or association into which the Trustee may be merged or with which it may be consolidated or any corporation or association resulting from any merger, conversion or consolidation to which it shall be a party or any corporation or association to which the Trustee may sell or transfer all or substantially all of its corporate trust business shall be the successor to such Trustee hereunder, without any further act, deed or conveyance, provided that such corporation or association shall be a commercial bank or trust company or national banking association qualified to be a successor to such Trustee under the provisions of Section 9. 10, or a trust company that is a wholly-owned subsidiary of any of the foregoing. Section 9.13. Trustee To File Continuation Statements. If necessary, the Trustee shall file or cause to be filed, such continuation statements as may be delivered to the Trustee and which may be required by the Texas Uniform Commercial Code, as from time to time in effect (the "UCC"), in order to continue perfection of the security interest of the Trustee in such items of tangible or intangible personal property and any fixtures as may have been granted to the Trustee pursuant to this Indenture in the time, place and manner required by the UCC. 54 Res 14-45 Exhibit Section 9.14. Accounts, Periodic Reports and Certificates. The Trustee shall keep or cause to be kept proper books of record and account (separate from all other records and accounts) in which complete and correct entries shall be made of its transactions relating to the Funds and Accounts established by this Indenture and which shall at all times be subject to inspection by the Town, and the Owner or Owners of not less than 10% in principal amount of the Bonds then Outstanding or their representatives duly authorized in writing. Section 9.15. Construction of Indenture. The Trustee may construe any of the provisions of this Indenture insofar as the same may appear to be ambiguous or inconsistent with any other provision hereof, and any construction of any such provisions hereof by the Trustee in good faith shall be binding upon the Owners of the Bonds. ARTICLE X MODIFICATION OR AMENDMENT OF THIS INDENTURE Section 10.1. Amendments Permitted. (a) This Indenture and the rights and obligations of the Town and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Indenture, except as provided below, pursuant to the affirmative vote at a meeting of Owners of the Bonds, or with the written consent without a meeting, of the Owners of the Bonds of at least fifty-one percent (51%) of the aggregate principal amount of the Bonds then Outstanding and Town approval of such modification or amendment. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the Town to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the Town of any pledge or lien upon the Pledged Revenues superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by Applicable Laws or this Indenture), or reduce the percentage of Bonds required for the amendment hereof. Any such amendment may not modify any of the rights or obligations of the Trustee without its written consent. (b) This Indenture and the rights and obligations of the Town and of the Owners may also be modified or amended at any time by a Supplemental Indenture, without the consent of any Owners, only to the extent permitted by law, and only for anyone or more of the following purposes: (i) to add to the covenants and agreements of the Town in this Indenture contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the Town; (ii) to make modifications not adversely affecting any Outstanding Bonds in any material respect; 55 Res 14-45 Exhibit (iii) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Indenture, or in regard to questions arising under this Indenture, as the Town and the Trustee may deem necessary or desirable and not inconsistent with this Indenture, and that shall not adversely affect the rights of the Owners of the Bonds; and (iv) to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from federal income taxation of interest on the Bonds. Section 10.2. Owners' Meetings. The Town may at any time call a meeting of the Owners of the Bonds. In such event the Town is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof, and to fix and adopt rules and regulations for the conduct of said meeting. Section 10.3. Procedure for Amendment with Written Consent of Owners. (a) The Town and the Trustee may at any time adopt a Supplemental Indenture amending the provisions of the Bonds or of this Indenture, to the extent that such amendment is permitted by Section 10. 1, to take effect when and as provided in this Section. A copy of such Supplemental Indenture, together with a request to Owners for their consent thereto, if such consent is required pursuant to Section 10. 1, shall be mailed by first class mail, by the Trustee to each Owner of Bonds from whom consent is required under this Indenture, but failure to mail copies of such Supplemental Indenture and request shall not affect the validity of the Supplemental Indenture when assented to as in this Section provided. (b) Such Supplemental Indenture shall not become effective unless there shall be filed with the Trustee the written consents of the Owners as required by this Indenture and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 11.6. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof), unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter in this Section provided for has been mailed. (c) After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Indenture, the Town shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Indenture, stating in substance that the Supplemental Indenture has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Indenture or consents thereto). Proof of the mailing of such notice shall be filed with the Trustee. A record, consisting of the papers required by this Section 10.3 to be filed with the Trustee, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Indenture shall become effective upon the filing with the Trustee of the proof of mailing of such notice, and the 56 Res 14-45 Exhibit Supplemental Indenture shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the Town and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period. Section 10.4. Procedure for Amendment Not Requiring Owner Consent. (a) The Town and the Trustee may at any time adopt a Supplemental Indenture amending the provisions of the Bonds or of this Indenture, to the extent that such amendment is permitted by Section 10.1, to take effect when and as provided in this Section. A copy of such Supplemental Indenture, together with a notice stating that the Supplemental Indenture does not require Owner consent, shall be mailed by first class mail by the Trustee to each Owner of Bonds, but failure to mail copies of such Supplemental Indenture shall not affect the validity of the Supplemental Indenture. The Trustee shall retain the proof of its mailing of such notice. A record, consisting of the papers required by this Section 10.4, shall be proof of the matters therein stated until the contrary is proved. (b) The Supplemental Indenture shall become effective upon the execution and delivery of such Supplemental Indenture by the Trustee and the Town, and the Supplemental Indenture shall be deemed conclusively binding upon the Town and the Owners of all Bonds as of the date of such execution and delivery. Section 10.5. Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article X, this Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties, and obligations under this Indenture of the Town and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 10.6. Endorsement or Replacement of Bonds Issued After Amendments. The Town may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article X shall bear a notation, by endorsement or otherwise, in form approved by the Town, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the designated office of the Trustee or at such other office as the Town may select and designate for that purpose, a suitable notation shall be made on such Bond. The Town may determine that new Bonds, so modified as in the opinion of the Town is necessary to conform to such Owners' action, shall be prepared, executed, and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the designated office of the Trustee without cost to any Owner, for Bonds then Outstanding, upon surrender of such Bonds. 57 Res 14-45 Exhibit Section 10.7. Amendatory Endorsement of Bonds. The provisions of this Article X shall not prevent any Owner from accepting any amendment as to the particular Bonds held by such Owner, provided that due notation thereof is made on such Bonds. Section 10.8. Waiver of Default. With the written consent of at least a majority in aggregate principal amount of the Bonds then Outstanding, the Owners may waive compliance by the Town with certain past defaults under this Indenture and their consequences. Any such consent shall be conclusive and binding upon the Owners and upon all future Owners. Section 10.9. Execution of Supplemental Indenture. In executing, or accepting the additional trusts created by, any Supplemental Indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, the Trustee shall receive, and shall be fully protected in relying upon, an opinion of counsel addressed and delivered to the Trustee and the Town stating that the execution of such Supplemental Indenture is permitted by and in compliance with this Indenture. The Trustee may, but shall not be obligated to, enter into any such Supplemental Indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. ARTICLE XI DEFAULT AND REMEDIES Section 11.1. Events of Default. Each of the following occurrences or events shall be and is hereby declared to be an "Event of Default," to wit: (i) The failure of the Town to deposit the Pledged Revenues to the Pledged Revenue Fund; (ii) The failure of the Town to enforce the collection of the Assessments including the prosecution of foreclosure proceedings, in accordance with Section 7.2; and (iii) Default in the performance or observance of any covenant, agreement or obligation of the Town under this Indenture and the continuation thereof for a period of ninety (90) days after written notice specifying such default and requiring same to be remedied shall have been given to the Town by the Trustee, which may give such notice in its discretion and shall give such notice at the written request of the Owners of not less than fifty-one percent (51%) in principal amount of the Bonds Similarly Secured then Outstanding; provided, however, if the default stated in the notice is capable of cure but cannot reasonably be cured within the applicable period, the Town shall be entitled to a further extension of time reasonably necessary to remedy such default so long as corrective action is instituted by the Town within the Res 14-45 Exhibit applicable period and is diligently pursued until such failure is corrected, but in no event for a period of time of more than one hundred eighty (180) days after such notice. Section 11.2. Immediate Remedies for Default. (a) Subject to Article VIII, upon the happening and continuance of any of the Events of Default described in Section 11. 1, then and in every such case the Trustee may proceed, and upon the written request of the Owners of not less than fifty-one percent (51%) in principal amount of the Bonds Similarly Secured then Outstanding hereunder shall proceed, to protect and enforce the rights of the Owners under this Indenture, by action seeking mandamus or by other suit, action, or special proceeding in equity or at law, in any court of competent jurisdiction, for any relief to the extent permitted by Applicable Laws, including, but not limited to, the specific performance of any covenant or agreement contained herein, or injunction; provided, however, that no action for money damages against the Town may be sought or shall be permitted. (b) PURSUANT TO SECTION 11.7, THE PRINCIPAL OF THE BONDS SHALL NOT BE SUBJECT TO ACCELERATION UNDER ANY CIRCUMSTANCES. (c) If the assets of the Trust Estate are sufficient to pay all amounts due with respect to Outstanding Bonds Similarly Secured, in the selection of Trust Estate assets to be used in the payment of Bonds Similarly Secured due under this Article, the Town shall determine, in its absolute discretion, and shall instruct the Trustee by Town Order, which Trust Estate assets shall be applied to such payment and shall not be liable to any Owner or other Person by reason of such selection and application. In the event that the Town shall fail to deliver to the Trustee such Town Order, the Trustee shall select and liquidate or sell Trust Estate assets as provided in the following paragraph, and shall not be liable to any Owner, or other Person, or the Town by reason of such selection, liquidation or sale. (d) Whenever moneys are to be applied pursuant to this Article XI, irrespective of and whether other remedies authorized under this Indenture shall have been pursued in whole or in part, the Trustee may cause any or all of the assets of the Trust Estate, including Investment Securities, to be sold. The Trustee may so sell the assets of the Trust Estate and all right, title, interest, claim and demand thereto and the right of redemption thereof, in one or more parts, at any such place or places, and at such time or times and upon such notice and terms as the Trustee may deem appropriate and as may be required by law and apply the proceeds thereof in accordance with the provisions of this Section. Upon such sale, the Trustee may make and deliver to the purchaser or purchasers a good and sufficient assignment or conveyance for the same, which sale shall be a perpetual bar both at law and in equity against the Town, and all other Persons claiming such properties. No purchaser at any sale shall be bound to see to the application of the purchase money proceeds thereof or to inquire as to the authorization, necessity, expediency, or regularity of any such sale. Nevertheless, if so requested by the Trustee, the Town shall ratify and confirm any sale or sales by executing and delivering to the Trustee or to such purchaser or purchasers all such instruments as may be necessary or, in the judgment of the Trustee, proper for the purpose which may be designated in such request. 59 Res 14-45 Exhibit Section 11.3. Restriction on Owner's Action. (a) No Owner shall have any right to institute any action, suit or proceeding at law or in equity for the enforcement of this Indenture or for the execution of any trust thereof or any other remedy hereunder, unless (i) a default has occurred and is continuing of which the Trustee has been notified in writing as provided in Section 11. 1, or of which by such Section it is deemed to have notice, (ii) such default has become an Event of Default and the Owners of fifty-one percent (51%) of the aggregate principal amount of the Bonds Similarly Secured then Outstanding have made written request to the Trustee and offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, (iii) the Owners have furnished to the Trustee indemnity as provided in Section 9.2, (iv) the Trustee has for 60 days after such notice failed or refused to exercise the powers hereinbefore granted, or to institute such action, suit, or proceeding in its own name, (v) no direction inconsistent with such written request has been given to the Trustee during such 60 -day period by the Owners of fifty-one percent (51 %) of the aggregate principal amount of the Bonds Similarly Secured then Outstanding, and (vi) notice of such action, suit, or proceeding is given to the Trustee; however, no one or more Owners of the Bonds Similarly Secured shall have any right in any manner whatsoever to affect, disturb, or prejudice this Indenture by its, his or their action or to enforce any right hereunder except in the manner provided herein, and that all proceedings at law or in equity shall be instituted and maintained in the manner provided herein and for the equal benefit of the Owners of all Bonds Similarly Secured then Outstanding. The notification, request and furnishing of indemnity set forth above shall, at the option of the Trustee, be conditions precedent to the execution of the powers and trusts of this Indenture and to any action or cause of action for the enforcement of this Indenture or for any other remedy hereunder. (b) Subject to Article VIII, nothing in this Indenture shall affect or impair the right of any Owner to enforce, by action at law, payment of any Bond at and after the maturity thereof, or on the date fixed for redemption or the obligation of the Town to pay each Bond issued hereunder to the respective Owners thereof at the time and place, from the source and in the manner expressed herein and in the Bonds. (c) In case the Trustee or any Owners of Bonds Similarly Secured shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or any Owners of Bonds Similarly Secured, then and in every such case the Town, the Trustee and the Owners of Bonds Similarly Secured shall be restored to their former positions and rights hereunder, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken. Section 11.4. Application of Revenues and Other Moneys After Default. (a) All moneys, securities, funds and Pledged Revenues and the income therefrom received by the Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the cost and expenses of the proceedings resulting in the collection of such amounts, the expenses (including its counsel), liabilities, and advances incurred or made by the Trustee and the fees of the Trustee in carrying out this Indenture, during the continuance of an Event of Default, notwithstanding Section 11.2, be applied by the Trustee, on behalf of the 60 Res 14-45 Exhibit Town, to the payment of interest and principal or Redemption Price then due on Bonds Similarly Secured, as follows: FIRST: To the payment to the Owners entitled thereto all installments of interest then due in the direct order of maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment, then to the payment thereof ratably, according to the amounts due on such installment, to the Owners entitled thereto, without any discrimination or preference; and SECOND: To the payment to the Owners entitled thereto of the unpaid principal of Outstanding Bonds Similarly Secured, or Redemption Price of any Bonds Similarly Secured which shall have become due, whether at maturity or by call for redemption, in the direct order of their due dates and, if the amounts available shall not be sufficient to pay in full all the Bonds Similarly Secured due on any date, then to the payment thereof ratably, according to the amounts of principal due and to the Owners entitled thereto, without any discrimination or preference. Within thirty (30) days of receipt of such good and available funds, the Trustee may fix a record date and a payment date for any payment to be made to Owners of Bonds Similarly Secured pursuant to this Section 11.4. (b) In the event funds are not adequate to cure any of the Events of Default described in Section 11. 1, the available funds shall be allocated to the Bonds Similarly Secured that are Outstanding in proportion to the quantity of Bonds Similarly Secured that are currently due and in default under the terms of this Indenture. (c) The restoration of the Town to its prior position after any and all defaults have been cured, as provided in Section 11.3, shall not extend to or affect any subsequent default under this Indenture or impair any right consequent thereon. Section 11.5. Effect of Waiver. No delay or omission of the Trustee, or any Owner, to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Indenture to the Trustee or the Owners, respectively, may be exercised from time to time and as often as may be deemed expedient. Section 11.6. Evidence of Ownership of Bonds. (a) Any request, consent, revocation of consent or other instrument which this Indenture may require or permit to be signed and executed by the Owners of Bonds may be in one or more instruments of similar tenor, and shall be signed or executed by such Owners in person or by their attorneys duly appointed in writing. Proof of the execution of any such instrument, or of any instrument appointing any such attorney, or the holding by any Person of the Bonds shall be sufficient for any purpose of this Indenture (except as otherwise herein expressly provided) if made in the following manner: Me Res 14-45 Exhibit (i) The fact and date of the execution of such instruments by any Owner of Bonds or the duly appointed attorney authorized to act on behalf of such Owner may be provided by a guarantee of the signature thereon by a bank or trust company or by the certificate of any notary public or other officer authorized to take acknowledgments of deeds, that the Person signing such request or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. Where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such signature guarantee, certificate, or affidavit shall also constitute sufficient proof of his authority. (ii) The ownership of Bonds and the amount, numbers and other identification and date of holding the same shall be proved by the Register. (b) Except as otherwise provided in this Indenture with respect to revocation of a consent, any request or consent by an Owner of any Bond shall bind all future Owners of the same Bond in respect of anything done or suffered to be done by the Town or the Trustee in accordance therewith. Section 11.7. No Acceleration. In the event of the occurrence of an Event of Default under Section 11. 1, the right of acceleration of any Stated Maturity is not granted as a remedy hereunder and the right of acceleration under this Indenture is expressly denied. Section 11.8. Mailing of Notice. Any provision in this Article for the mailing of a notice or other document to Owners shall be fully complied with if it is mailed, first class postage prepaid, only to each Owner at the address appearing upon the Register. Section 11.9. Exclusion of Bonds. Bonds owned or held by or for the account of the Town will not be deemed Outstanding for the purpose of consent or other action or any calculation of Outstanding Bonds provided for in this Indenture, and the Town shall not be entitled with respect to such Bonds to give any consent or take any other action provided for in this Indenture. ARTICLE XII GENERAL COVENANTS AND REPRESENTATIONS Section 12.1. Representations as to Pledged Revenues. (a) The Town represents and warrants that it is authorized by Applicable Laws to authorize and issue the Bonds, to execute and deliver this Indenture and to pledge the Pledged Revenues in the manner and to the extent provided in this Indenture, and that the Pledged Revenues are and will be and remain free and clear of any pledge, lien, charge, or encumbrance 62 Res 14-45 Exhibit thereon or with respect thereto prior to, or of equal rank with, the pledge and lien created in or authorized by this Indenture except as expressly provided herein. (b) The Town shall at all times, to the extent permitted by Applicable Laws, defend, preserve and protect the pledge of the Pledged Revenues and all the rights of the Owners and the Trustee, under this Indenture against all claims and demands of all Persons whomsoever. (c) Subject to Section 7.2(d), the Town will take all steps reasonably necessary and appropriate, and will direct the Trustee to take all steps reasonably necessary and appropriate, to collect all delinquencies in the collection of the Assessments and any other amounts pledged to the payment of the Bonds to the fullest extent permitted by the PID Act and other Applicable Laws. Section 12.2. General. The Town shall do and perform or cause to be done and performed all acts and things required to be done or performed by or on behalf of the Town under the provisions of this Indenture. ARTICLE XIII SPECIAL COVENANTS Section 13.1. Further Assurances; Due Performance. (a) At any and all times the Town will duly execute, acknowledge and deliver, or will cause to be done, executed and delivered, all and every such further acts, conveyances, transfers, and assurances in a manner as the Trustee shall reasonably require for better conveying, transferring, pledging, and confirming unto the Trustee, all and singular, the revenues, Funds, Accounts and properties constituting the Pledged Revenues, and the Trust Estate hereby transferred and pledged, or intended so to be transferred and pledged. (b) The Town will duly and punctually keep, observe and perform each and every term, covenant and condition on its part to be kept, observed and performed, contained in this Indenture. Section 13.2. Other Obligations or Other Liens; Additional Bonds. (a) The Town reserves the right to issue obligations under other indentures, assessment ordinances, or similar agreements or other obligations which do not constitute or create a lien on the Trust Estate and are not payable from Pledged Revenues. (b) The Town will not create or voluntarily permit to be created any debt, lien or charge on the Trust Estate, and will not do or omit to do or suffer to be done or omit to be done any matter or things whatsoever whereby the lien of this Indenture or the priority hereof might or could be lost or impaired; and further covenants that it will pay or cause to be paid or will make adequate provisions for the satisfaction and discharge of all lawful claims and demands which if unpaid might by law be given precedence over or any equality with this Indenture as a lien or 63 Res 14-45 Exhibit charge upon the Pledged Revenues or Pledged Funds; provided, however, that nothing in this Section shall require the Town to apply, discharge, or make provision for any such lien, charge, claim, or demand so long as the validity thereof shall be contested by it in good faith, unless thereby, in the opinion of counsel to the Trustee, the same would endanger the security for the Bonds. (c) The Town reserves the right to issue Additional Bonds for any purpose permitted by the PID Act and in accordance with the conditions set forth below: (i) A Town Representative shall certify that the Town is not in default in the performance and observance of any of the terms, provisions and conditions applicable to it contained in the Indenture. (ii) The Developer, through an authorized representative, shall certify that: a. It is not in default in the performance and observance of any of the terms, provisions and conditions applicable to it contained in the Financing Agreement; b. At least 75% of the residential lots within Improvement Area #3 (East Residential) to be financed are under contract with merchant homebuilders unaffiliated with the Developer; c. Construction has commenced or been completed on at least 33% of the single-family homes located within Improvement Area #2 (West Residential); d. The appraised value of the Improvement Area #1, Improvement Area #2, and Improvement Area #3 Assessed Parcels, assuming completion of all Improvement Project A Improvements, is equal to at least three (3) times the principal amount of all outstanding Bonds Similarly Secured, taking into account the Additional Bonds to be issued; and e. The appraised value allocated to each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel, and Improvement Area #3 Assessed Parcel is at least two and a half (2.5) times the portion of the principal amount of all Outstanding Bonds Similarly Secured, taking into account the Additional Bonds to be issued, that is allocated to each such Assessed Parcel. (iii) The principal of and interest on the Additional Bonds must be scheduled to be paid or mature on March 1 or September 1, or both, of the years in which principal or interest is scheduled to be paid or mature with a final maturity date no more than thirty (30) years from their date of issuance. :, Res 14-45 Exhibit (iv) There shall be deposited to the Reserve Fund an amount equal to the Reserve Fund Requirement taking into account the Outstanding Bonds Similarly Secured and the Additional Bonds then proposed to be issued. Section 13.3. Books of Record. (a) The Town shall cause to be kept full and proper books of record and accounts, in which full, true and proper entries will be made of all dealings, business and affairs of the Town, which relate to the Pledged Revenues, the Pledged Funds, and the Bonds. (b) The Trustee shall have no responsibility with respect to the financial and other information received by it pursuant to this Section 13.3 except to receive and retain same, subject to the Trustee's document retention policies, and to distribute the same in accordance with the provisions of this Indenture. ARTICLE XIV PAYMENT AND CANCELLATION OF THE BONDS AND SATISFACTION OF THE INDENTURE Section 14.1. Trust Irrevocable. The trust created by the terms and provisions of this Indenture is irrevocable until the Bonds secured hereby are fully paid or provision is made for their payment as provided in this Article. Section 14.2. Satisfaction of Indenture. If the Town shall pay or cause to be paid, or there shall otherwise be paid to the Owners, principal of and interest on all of the Bonds, at the times and in the manner stipulated in this Indenture, and all amounts due and owing with respect to the Bonds have been paid or provided for, then the pledge of the Trust Estate and all covenants, agreements, and other obligations of the Town to the Owners of such Bonds, shall thereupon cease, terminate, and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Town copies of all such documents as it may have evidencing that principal of and interest on all of the Bonds has been paid so that the Town may determine if this Indenture is satisfied; if so, the Trustee shall pay over or deliver all moneys held by it in the Funds and Accounts held hereunder to the Person entitled to receive such amounts, or, if no Person is entitled to receive such amounts, then to the Town. Section 14.3. Bonds Deemed Paid. (a) Any Outstanding Bonds shall, prior to the Stated Maturity or redemption date thereof, be deemed to have been paid and no longer Outstanding within the meaning of this Trust Indenture (a "Defeased Debt"), and particularly this Article XIV, when payment of the principal of, premium, if any, on such Defeased Debt, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, redemption, or otherwise), either (1) shall have been made in accordance with the terms thereof, or (2) shall have been provided by irrevocably 65 Res 14-45 Exhibit depositing with the Trustee, in trust, and irrevocably set aside exclusively for such payment, (A) money sufficient to make such payment or (B) Defeasance Securities, certified by an independent public accounting firm of national reputation to mature as to principal and interest in such amount and at such times as will insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation, and expenses of the Trustee pertaining to the Bonds with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. Neither Defeasance Securities nor moneys deposited with the Trustee pursuant to this Section nor principal or interest payments on any such Defeasance Securities shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of and interest on the Bonds. Any cash received from such principal of and interest on such Defeasance Securities deposited with the Trustee, if not then needed for such purpose, shall, be reinvested in Defeasance Securities as directed by the Town maturing at times and in amounts sufficient to pay when due the principal of and interest on the Bonds on and prior to such redemption date or maturity date thereof, as the case may be. Any payment for Defeasance Securities purchased for the purpose of reinvesting cash as aforesaid shall be made only against delivery of such Defeasance Securities. (b) Any determination not to redeem Defeased Debt that is made in conjunction with the payment arrangements specified in Sections 14.3(a)(1) or 14.3(a)(2) shall not be irrevocable, provided that: (1) in the proceedings providing for such defeasance, the Town expressly reserves the right to call the Defeased Debt for redemption; (2) the Town gives notice of the reservation of that right to the Owners of the Defeased Debt immediately following the defeasance; (3) the Town directs that notice of the reservation be included in any defeasance or redemption notices that it authorizes; and (4) at or prior to the time of the redemption, the Town satisfies the conditions of clause (a) of this Section 14.3 with respect to such Defeased Debt as though it was being defeased at the time of the exercise of the option to redeem the Defeased Debt, after taking the redemption into account in determining the sufficiency of the provisions made for the payment of the Defeased Debt. ARTICLE XV MISCELLANEOUS Section 15.1. Benefits of Indenture Limited to Parties. Nothing in this Indenture, expressed or implied, is intended to give to any Person other than the Town, the Trustee and the Owners, any right, remedy, or claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture by and on behalf of the Town shall be for the sole and exclusive benefit of the Owners and the Trustee. Section 15.2. Successor is Deemed Included in All References to Predecessor. Whenever in this Indenture or any Supplemental Indenture either the Town or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Town or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. :. Res 14-45 Exhibit Section 15.3. Execution of Documents and Proof of Ownership by Owners. (a) Any request, declaration, or other instrument which this Indenture may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys duly appointed in writing. (b) Except as otherwise expressly provided herein, the fact and date of the execution by any Owner or his attorney of such request, declaration, or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the Person signing such request, declaration, or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. (c) Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number, and date of holding the same shall be proved by the Register. (d) Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the Town or the Trustee in good faith and in accordance therewith. Section 15.4. No Waiver of Personal Liability. No member, officer, agent, or employee of the Town shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent, or employee from the performance of any official duty provided by law. Section 15.5. Notices to and Demands on Town and Trustee. (a) Except as otherwise expressly provided herein, all notices or other instruments required or permitted under this Indenture shall be in writing and shall be faxed, delivered by hand, or mailed by first class mail, postage prepaid, and addressed as follows: If to the Town If to the Trustee Or the Paying Agent/Registrar Town of Westlake, Texas 3 Village Circle, Suite 202 Westlake, Texas 76226 Attn: Town Manager Telephone: (817) 490-5720 U.S. Bank National Association 13737 Noel Road, Suite 800 Dallas, Texas 75240 Attn: Corporate Trust Services Fax: (972) 581-1660 (b) Any such notice, demand, or request may also be transmitted to the appropriate parry by telegram or telephone and shall be deemed to be properly given or made at the time of 67 Res 14-45 Exhibit such transmission if, and only if, such transmission of notice shall be confirmed in writing and sent as specified above. (c) Any of such addresses may be changed at any time upon written notice of such change given to the other party by the parry effecting the change. Notices and consents given by mail in accordance with this Section shall be deemed to have been given five Business Days after the date of dispatch; notices and consents given by any other means shall be deemed to have been given when received. (d) The Trustee shall mail to each Owner of a Bond notice of (1) any substitution of the Trustee; or (2) the redemption or defeasance of all Bonds Outstanding. Section 15.6. Partial Invalidity. If any Section, paragraph, sentence, clause, or phrase of this Indenture shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Indenture. The Town hereby declares that it would have adopted this Indenture and each and every other Section, paragraph, sentence, clause, or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that anyone or more Sections, paragraphs, sentences, clauses, or phrases of this Indenture may be held illegal, invalid, or unenforceable. Section 15.7. Applicable Laws. This Indenture shall be governed by and enforced in accordance with the laws of the State applicable to contracts made and performed in the State. Section 15.8. Payment on Business Day. In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Indenture is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day that is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date. Section 15.9. Counterparts. This Indenture may be executed in counterparts, each of which shall be deemed an original. [Remainder ofpage left blank intentionally] 68 Res 14-45 Exhibit IN WITNESS WHEREOF, the Town and the Trustee have caused this Indenture of Trust to be executed as of the date hereof. Attest: Town Secretary (TOWN SEAL) TOWN OF WESTLAKE, TEXAS Mayor Town Signature Page to Indenture of Trust Res 14-45 Exhibit as Trustee M. Authorized Officer Trustee Signature Page to Indenture of Trust Res 14-45 Exhibit EXHIBIT A DESCRIPTION OF THE PROPERTY WITHIN THE SOLANA PUBLIC IMPROVEMENT DISTRICT A-1 Res 14-45 Exhibit [THIS PAGE INTENTIONALLY LEFT BLANK] Res 14-45 Exhibit APPENDIX B SERVICE AND ASSESSMENT PLAN Res 14-45 Exhibit (THIS PAGE IS INTENTIONALLY LEFT BLANK) Res 14-45 Exhibit SOLANA PUBLIC IMPROVEMENT DISTRICT SERVICE AND ASSESSMENT PLAN NOVEMBER 21, 2014 MuniCap Inc. v6.2 Res 14-45 Exhibit SOLANA PUBLIC IMPROVEMENT DISTRICT SERVICE AND ASSESSMENT PLAN Table of Contents Section I Plan Description and Defined Terms 1 Section II Property Included in the PID 7 Section III Description of Authorized Improvements 9 Section IV Service Plan 13 Section V Assessment Plan 16 Section VI Terms of the Assessments 23 Section VII Assessment Roll 29 Section VIII Miscellaneous Provisions 30 List of Appendix Appendix A The PID Map Appendix B Estimated Costs of the Authorized Improvements Appendix C Diagrams of the Authorized Improvements Appendix D Land Use Class, Equivalent Units and Allocation of Assessment Part A Appendix E Assessment Rolls MuniCap, Inc. v6.2 Res 14-45 Exhibit Section I PLAN DESCRIPTION AND DEFINED TERMS A. Introduction On February 24, 2014, (the "Creation Date") the Town of Westlake Town Council ("Town Council") passed Resolution No. 14-07 approving and authorizing the creation of the Solana Public Improvement District (the "PID") to finance the costs of certain public improvements for the benefit of property in the PID, all of which is located within the boundaries of the Town of Westlake, Texas ("Town"). Upon application of the current property owners, the property within the PID was zoned by Ordinance No. 703 (the "Zoning Ordinance") adopted by the Town on April 22, 2013, as amended and including all required approvals. The Zoning Ordinance designates the type of land uses that are permitted within the project and includes development standards for each land use type. Chapter 372 of the Texas Local Government Code, "the Public Improvement Assessment Act" (as amended, the "PID Act"), governs the creation and operation of public improvement districts within the State of Texas. This Service and Assessment Plan has been prepared pursuant to the PID Act and specifically Sections 372.013, 372.014, 372.015 and 372.016, which address the requirements of a service and assessment plan and the assessment roll. According to Section 372.013 of the PID Act, a service plan "must cover a period of at least five years and must also define the annual indebtedness and the projected costs for improvements. The plan shall be reviewed and updated annually for the purpose of determining the annual budget for improvements." The service plan is described in Section IV of this Service and Assessment Plan. Section 372.014 of the PID Act states that "an assessment plan must be included in the annual service plan." The assessment plan is described in Section V of this Service and Assessment Plan. Section 372.015 of the PID Act states that "the governing body of the municipality or county shall apportion the cost of an improvement to be assessed against property in an improvement district." The method of assessing the PID Costs (herein after defined) and apportionment of such costs to the property in the PID is included in Section V of this Service and Assessment Plan. Section 372.016 of the PID Act states that "after the total cost of an improvement is determined, the governing body of the municipality or county shall prepare a proposed assessment roll. The roll must state the assessment against each parcel of land in the district, as determined by the method of assessment chosen by the municipality or county under this subchapter." The Assessment Rolls for the PID are included as Appendix E of this Service and Assessment Plan. The Assessments as shown on the Assessment Rolls are based on the method of assessment and apportionment of costs described in Section V of this Service and Assessment Plan. B. Definitions Capitalized terms used herein shall have the meanings ascribed to them as follows: 1 Res 14-45 Exhibit "Actual Cost(s)" means, with respect to an Authorized Improvement, the demonstrated, reasonable, allocable, and allowable costs of constructing such Authorized Improvement, as specified in a Certification for Payment that has been reviewed and approved by the Town. Actual Cost may include but are not limited to (a) the costs for the design, planning, financing, administration, management, acquisition, installation, construction and/or implementation of such Authorized Improvement, including general contractor construction management fees, if any, (b) the costs of preparing the construction plans for such Authorized Improvement, (c) the fees paid for obtaining permits, licenses or other governmental approvals for such Authorized Improvement, (d) the costs for external professional costs associated with such Authorized Improvement, such as engineering, geotechnical, surveying, land planning, architectural landscapers, advertising, marketing and research studies, appraisals, legal, accounting and similar professional services, taxes (property and franchise) (e) the costs of all labor, bonds and materials, including equipment and fixtures, incurred by contractors, builders and material men in connection with the acquisition, construction or implementation of the Authorized Improvements, (f) all related permitting, zoning and public approval expenses, architectural, engineering, legal, and consulting fees, financing charges, taxes, governmental fees and charges (including inspection fees, County permit fees, development fees), insurance premiums, miscellaneous expenses, and all advances and payments for Administrative Expenses. Actual Costs include general contractor's fees in an amount up to a percentage equal to the percentage of work completed and accepted by the City or construction management fees in an amount up to five percent of the eligible Actual Costs described in a Certification for Payment (and subject to approval by the Town). General contractor's fees and construction management fees shall be budgeted in the project budget and itemized on each submittal on a payment request; and the amounts expended on legal costs, taxes, governmental fees, insurance premiums, permits, financing costs, and appraisals shall be excluded from the base upon which the general contractor and construction management fees are calculated. "Administrator" means the employee or designee of the Town who shall have the responsibilities provided for herein, in the Trust Indenture related to Bonds issued for the PID or otherwise approved by the Town Council. "Administrative Expenses" mean the costs associated with or incident to the administration, organization, maintenance and operation of the PID, including, but not limited to, the costs o£ (i) creating and organizing the PID, including conducting hearings, preparing notices and petitions, and all costs incident thereto, engineering fees, legal fees and consultant fees, (ii) the annual administrative, organization, maintenance, and operation costs and expenses associated with, or incident and allocable to, the administration, organization, maintenance and operation of the PID and the Authorized Improvements, (iii) computing, levying, billing and collecting Assessments or the installments thereof, (iv) maintaining the record of installments of the Assessments and the system of registration and transfer of the Bonds, (v) paying and redeeming the Bonds, (vi) investing or depositing of monies, (vii) complying with the PID Act and codes with respect to the Bonds, (viii) Trustee fees and expenses relating to the Bonds, (ix) legal counsel, engineers, accountants, financial advisors, investment bankers or other consultants and advisors providing services related to the Bonds, and (x) administering the construction of the Authorized Improvements. Administrative Expenses do not include payment of the actual principal of, redemption premium, and interest on the Bonds. Amounts collected in conjunction with Annual 2 Res 14-45 Exhibit Installments for Administrative Expenses and not expended for actual Administrative Expenses shall be carried forward and applied to reduce Administrative Expenses in subsequent years to avoid the over -collection of Administrative Expenses. "Annual Installment" means, with respect to each Parcel, each annual payment of. (i) the Assessments, including any applicable interest, as shown on the Assessment Rolls attached hereto as Appendix E, as applicable, or in an Annual Service Plan Update, and calculated as provided in Section VI of this Service and Assessment Plan, (ii) Administrative Expenses, (iii) the prepayment reserve described in Section IV of this Service and Assessment Plan, and (iv) the delinquency reserve as described in Section IV of this Service and Assessment Plan. "Annual Installment Part A" means, with respect to each Parcel, each annual payment of. (i) the Assessment Part A, including any applicable interest, as shown on the Assessment Roll attached hereto as Appendix E, as applicable, or in an Annual Service Plan Update, and calculated as provided in Section VI of this Service and Assessment Plan, (ii) Administrative Expenses, (iii) the prepayment reserve described in Section V of this Service and Assessment Plan, and (iv) the delinquency reserve as described in Section V of this Service and Assessment Plan. "Annual Installment Part B" means, with respect to each Parcel, each annual payment of. (i) the Assessment Part B, including any applicable interest, as shown on the Assessment Roll attached hereto as Appendix E, as applicable, or in an Annual Service Plan Update, and calculated as provided in Section VI of this Service and Assessment Plan, (ii) Administrative Expenses, (iii) the prepayment reserve described in Section V of this Service and Assessment Plan, and (iv) the delinquency reserve as described in Section V of this Service and Assessment Plan. "Annual Service Plan Update" has the meaning set forth in the first paragraph of Section IV of this Service and Assessment Plan. "Assessed Property" means the property within the PID that benefits from the Authorized Improvements, as determined by the Town Council, on which Assessments have been imposed as shown in the Assessment Rolls, as the Assessment Rolls are updated each year by the Annual Service Plan Update. Assessed Property includes all Parcels within the PID other than Non - Benefited Property. "Assessment" means the assessment(s) levied against Parcels within the PID imposed pursuant to the Assessment Ordinance and the provisions herein as shown on the Assessment Rolls, subject to reallocation upon the subdivision of such Parcel or reduction according to the provisions herein and the PID Act. "Assessment Ordinance" means an Ordinance adopted by the Town Council approving the Service and Assessment Plan (including updates, amendments or supplements to the Service and Assessment Plan) and levying the Assessments. "Assessment Part A" means the portion of the Assessments levied for Improvement Project A as shown in the Assessment Rolls. 3 Res 14-45 Exhibit "Assessment Part B" means the portion of the Assessments levied for Improvement Project B as shown in the Assessment Rolls, as may be updated in the Annual Service Plan Updates. "Assessment Revenues" mean the revenues actually received by the Town from Assessments. "Assessment Roll" means an assessment roll included in Appendix E of this Service and Assessment Plan, as it may be updated, amended, or replaced by a supplement to this Service and Assessment Plan or an Annual Service Plan Update. "Authorized Improvements" mean those public improvements described in Section III and Appendix B of this Service and Assessment Plan and any future updates and/or amendments. "Authorized Improvement Costs" mean the actual or budgeted costs, as applicable, of all or any portion of the Authorized Improvements, as described in Section III and shown in Appendix B, as these costs may be updated from time to time. "Bonds" mean any bonds issued by the Town in one or more series and secured by the Assessment Revenues. "Bond Indenture" means the indenture, ordinance or similar document setting forth the terms and other provisions relating to the Bonds, as modified, amended, or supplemented from time to time. "Certification for Payment" means the document to be provided by the Developer to substantiate the Actual Cost of one or more Authorized Improvements, as approved by the Town. "Delinquent Collection Costs" mean interest, penalties and expenses incurred or imposed with respect to any delinquent installment of an Assessment in accordance with the PID Act and the costs related to pursuing collection of a delinquent Assessment and foreclosing the lien against the Assessed Property, including attorney's fees. "Developer" means Maguire Partners — Solana Land, L.P. "Equivalent Units" mean, as to any Parcel, the number of dwelling units by Land Use Class or non-residential development by type expected to be built on the Parcel multiplied by the factors calculated and shown in Appendix D attached hereto, as Appendix D may be updated by an Annual Service Plan Update. "Improvement Area #1" means the area of the PID to be improved by Improvement Project A and Improvement Project B, consisting of the property shown within Improvement Area #1 on Appendix A, and commonly referred to as the Mixed -Use Core. "Improvement Area #2" means the area of the PID to be improved by Improvement Project A, consisting of the property shown within Improvement Area #2 on Appendix A, and commonly referred to as West Residential. 2 Res 14-45 Exhibit "Improvement Area #3" means the area of the PID to be improved by Improvement Project A, consisting of the property shown within Improvement Area #3 on Appendix A and commonly referred to as East Residential. "Improvement Area #1 Assessed Property" means the property within the PID that benefits from the Improvement Project A and Improvement Project B as determined by the Town Council on which Assessments Part A and Assessments Part B have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update. Improvement Area #1 Assessed Property includes all Parcels within Improvement Area #1 of the PID other than Non -Benefited Property. "Improvement Area #2 Assessed Property" means the property within the PID that benefits from the Improvement Project A as determined by the Town Council on which Assessments Part A have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update. Improvement Area #2 Assessed Property includes all Parcels within Improvement Area #2 of the PID other than Non -Benefited Property. "Improvement Area #3 Assessed Property" means the property within the PID that benefits from the Improvement Project A as determined by the Town Council on which Assessments Part A have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update. Improvement Area #3 Assessed Property includes all Parcels within Improvement Area #3 of the PID other than Non -Benefited Property. "Improvement Project A" means the Authorized Improvements described as such in Section III and shown in Appendix B of this Service and Assessment Plan and any future updates and/or amendments. "Improvement Project B" means the portion of the Authorized Improvements described as such in Section III and shown in Appendix B of this Service and Assessment Plan and any future updates and/or amendments. "Land Use Class" means a classification of property with similar characteristics regarding the intended use of the property (e.g., residential, retail, office, hotel, etc.), as allowed by the Zoning Ordinance. "Lot" means a tract of land described as a "lot" in a subdivision plat recorded in the official public records of Tarrant County, Texas. "Non -Benefited Property" means Parcels within the boundaries of the PID that accrue no special benefit from the Authorized Improvements, as determined by the Town Council, including Property Owner Association Property, public property and easements that create an exclusive use for a public utility provider. Property identified as Non -Benefited Property at the time the Assessments (i) are imposed or (ii) are reallocated pursuant to a subdivision of a Parcel, is not assessed. Assessed Property converted to Non -Benefited Property, if the Assessments may not be reallocated pursuant to the provisions herein, remains subject to the Assessments and requires the Assessments to be prepaid as provided for in Section VI. C. 2. 5 Res 14-45 Exhibit "Parcel" or "Parcels" means a parcel or parcels within the PID identified by either a tax map identification number assigned by the Tarrant Central Appraisal District for real property tax purposes or by lot and block number in a final subdivision plat recorded in the real property records of Tarrant County. "PID" has the meaning set forth in Section LA of this Service and Assessment Plan. "PID Act" means Texas Local Government Code Chapter 372, Public Improvement Assessment Act, Subchapter A, Public Improvement Districts, as amended. "PID Costs" means the Administrative Expenses and the Authorized Improvement Costs "Prepayment Costs" mean interest and expenses to the date of prepayment, plus any additional expenses related to the prepayment, reasonably expected to be incurred by or imposed upon the Town as a result of any prepayment of an Assessment. "Property Owners' Association" means that mandatory association of all property owners in the PID other than owners only of non -benefitted property, which shall be responsible for the operation and maintenance of the Property Owner's Association Property, public infrastructure, and the right-of-ways. "Property Owner Association Property" means property within the boundaries of the PID that is owned by or dedicated to, whether in fee simple or through an exclusive use easement, a property owners' association. All Property Owner Association Property will be identified on approved plats. "Property Owner Association Property — Public Access" means property (as shown in Exhibit _) within the boundaries of the PID that is owned or dedicated to, whether in fee simple or through an exclusive use easement, a property owners' association and that allows public access through public access easements or similar instruments. "Public Property" means property within the boundaries of the PID that is owned by or irrevocably offered for dedication to the federal government, the State of Texas, Tarrant County, the Town, a school district or any other public agency, whether in fee simple, through dedication by plat, or through an exclusive use easement. "Service and Assessment Plan" means this Service and Assessment Plan prepared for the PID pursuant to the PID Act, as the same may be amended from time to time. "Town" means the Town of Westlake, Texas. "Town Council" means the duly elected governing body of the Town. "Trustee" means the fiscal agent or trustee as specified in the Trust Indenture, including a substitute fiscal agent or trustee. "Zoning Ordinance" has the meaning set forth in Section I.A of this Service and Assessment Plan. 0 Res 14-45 Exhibit Section II PROPERTY INCLUDED IN THE PID Property Included in the PID The PID is presently located within the Town and contains approximately 85 acres of land. A map of the property within the PID is shown on Appendix A to this Service and Assessment Plan. At completion, the PID is expected to consist of approximately 322 residential units, approximately 1,158,299 square feet of commercial development, landscaping, and infrastructure necessary to provide roadways, drainage, and utilities for the property in the PID. The estimated number of lots and the classification of each lot are based upon the Zoning Ordinance. The property within the PID is proposed to be developed as follows: Table II -A Proposed Development The current Parcels in the PID are shown on the Assessment Roll included as Appendix E and the map included as Appendix A. 7 Res 14-45 Exhibit Improvement Improvement Improvement Area #1 Area #2 Area #3 Planned Unit of Planned Unit of Planned Unit of No. of Measure No. of Measure No. of Measure Proposed Development Type Units Units Units Residential Condo Units (more than 3,600 sq. ft) 38 Units 0 Units 0 Units Condo Units (2,500 to 3,600sq. ft) 71 Units 0 Units 0 Units Condo Units (1,800 to 2,500 sq. ft) 6 Units 0 Units 0 Units Villa - West (more than 3,600 sq. ft) 0 Units 42 Units 0 Units Villa - West (2,500 to 3,600sq. ft) 0 Units 16 Units 0 Units Villa - West (1,800 to 2,500 sq. ft) 0 Units 69 Units 0 Units Villa - East (more than 3,600 sq. ft) 0 Units 0 Units 21 Units Villa - East (2,500 to 3,600sq. ft) 0 Units 0 Units 23 Units Villa - East 1,800 to 2,500 sq. ft) 0 Units 0 Units 36 Units Subtotal - Residential 115 Units 127 Units 80 Units Commercial Commercial - Retail 372,099 Sq. Ft 0 Sq. Ft 0 Sq. Ft Commercial - Office 266,100 Sq. Ft 0 Sq. Ft 0 Sq. Ft Commercial - Hospitality 255,500 Sq. Ft 0 Sq. Ft 0 Sq. Ft Commercial - Institutional 264,600 Sq. Ft 0 Sq. Ft 0 S . Ft Subtotal —Commercial 1 1,158,299 1 Sq. Ft 1 0 1 Sq. Ft 1 0S . Ft The current Parcels in the PID are shown on the Assessment Roll included as Appendix E and the map included as Appendix A. 7 Res 14-45 Exhibit The estimated number of units at the build -out of the PID is based on the land use approvals for the property, the anticipated subdivision of property in the PID, and the Developer's estimate of the highest and best use of the property within the PID subject to the land use approvals. Res 14-45 Exhibit Section III DESCRIPTION OF THE AUTHORIZED IMPROVEMENTS A. Authorized Improvements Overview Section 372.003 of the PID Act defines the improvements that may be undertaken by a municipality or county through the establishment of a public improvement district, as follows: 372.003. Authorized Improvements (a) If the governing body of a municipality or county finds that it promotes the interests of the municipality or county, the governing body may undertake an improvement project that confers a special benefit on a definable part of the municipality or county or the municipality's extraterritorial jurisdiction. A project may be undertaken in the municipality or county or the municipality's extraterritorial jurisdiction. (b) A public improvement may include, among others: (i) landscaping; (ii) erection of fountains, distinctive lighting, and signs; (iii) acquiring, constructing, improving, widening, narrowing, closing, or rerouting of sidewalks or of streets, any other roadways, or their rights -of way; (iv) construction or improvement of pedestrian malls; (v) acquisition and installation of pieces of art; (vi) acquisition, construction, or improvement of libraries; (vii) acquisition, construction, or improvement of off-street parking facilities; (viii) acquisition, construction, or improvement of water, wastewater, or drainage facilities or improvements; (ix) the establishment or improvement of parks; (x) projects similar to those listed in Subdivisions (i) -(x); (xi) acquisition, by purchase or otherwise, of real property in connection with an authorized improvement; (xii) special supplemental services for improvement and promotion of the district, including services relating to advertising, promotion, health and sanitation, water and wastewater, public safety, security, business recruitment, development, recreation, and cultural enhancement; and (xiii) payment of expenses incurred in the establishment, administration and operation of the district. 9 Res 14-45 Exhibit After analyzing the public improvement projects authorized by the PID Act, the Town has determined that the Authorized Improvements as described in Appendix B and shown on the diagrams included as Appendix C should be undertaken by the Town for the benefit of the property within the PID. B. Description of the Authorized Improvements The Authorized Improvements are described below. The costs of the Authorized Improvements are shown in Table III -A. The costs shown in Table III -A are estimates and may be revised in Annual Service Plan Updates, including such other improvements as deemed necessary to further improve the properties within the PID. Improvement Proiect A The Authorized Improvements to be constructed as Improvement Project A include roadway improvements, water distribution system improvements, storm sewer collection system improvements, wastewater collection system improvements and landscaping & public park improvements that will provide service to the property intended for development within the PID. The Authorized Improvements benefit all of the property within Improvement Area #1, Improvement Area #2 and Improvement Area #3. As a result, Improvement Project A benefits all of the property within the PID proposed for development. Road Improvements The roadway improvements include approximately 49,116 SY of 6 -inch reinforced concrete pavement, 34,506 SY of 8 -inch reinforced concrete pavements, 89,500 SY of 8 -inch treated sub - grade compacted to 95% SPD, striping, street signage and signals, turn lanes and bridges. A detailed description of the roadway improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All roadway improvements will be constructed according to the Town requirements. See Table III -A for cost details. Water Distribution System Improvements The water distribution system improvements consist of approximately 15,640 linear feet of 12 - inch water lines, approximately 6,149 linear feet of 8 -inch water lines, fire hydrants and trench safety procedures. A detailed description of the water distribution system improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All water distribution system improvements will be constructed according to the Town requirements. This development will be served in its entirety by the Town for all water and sewer services. See Table III -A for cost details. Sanitary Sewer Improvements The sanitary sewer collection system improvements consist of approximately 14,554 linear feet of 8 -inch PVC, including sewer laterals, manholes and trench safety procedures. A detailed description of the sanitary sewer collection system improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All sanitary sewer collection 10 Res 14-45 Exhibit system improvements will be constructed according to the Town requirements. See Table III -A for cost details. Storm Drainage Improvements The storm sewer collection system improvements consist of approximately 6,014 linear feet of various sized RCP pipes, manholes, junction boxes, inlets, headwalls and trench safety procedures. A detailed description of the storm sewer collection system improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All storm sewer collection system improvements will be constructed according to the Town requirements. See Table III -A for cost details. Landscaping Landscaping, which includes public park improvements, include the creation of a 12 -acre central lake, vineyards, trees, rubble stone walls and pathways on approximately nine acres, installation of over 2%2 miles of 8-12' wide concrete paths with seating areas, public art and public lighting details, including bollards, gathering area lighting and street lighting. All landscaping improvements will be constructed according to the Town requirements. See Table III -A for cost details. The water and sanitary sewer improvements listed above help create the grid for the water line system and the sanitary sewer collection system for the property. The storm sewer improvements collect and control the runoff created on each Parcel and conveys this runoff to the large central lake, which also serves as a storm water detention pond for the property in the PID. The road improvements provide for the traffic circulation within the property, allowing access to and from the adjacent roadways to each Parcel. Duct Bank Extension The duct bank extension improvements include 4,955 linear feet of double conduit with pull boxes and 13,891 linear feet of single conduit with pull boxes that runs parallel to the street network and to be used by franchise utilities such as cable and fiber. Improvement Protect B The Authorized Improvements to be constructed as Improvement Project B include a parking structure with approximately 440 parking spaces. Improvement Project B will provide service to the property intended for development with the PID. These Authorized Improvements benefit all of the property within Improvement Area #1. As shown in the map on Appendix A, the Improvement Area #1 boundary covers a portion of the property in the PID. As a result, Improvement Project B benefits the property within Improvement Area #1 of the PID proposed for development. 11 Res 14-45 Exhibit Table III -A Estimated Authorized Improvement Costs Authorized Improvements Improvement Project A Improvement Project B Total Estimated Costs Road improvements $4,389,900 $0 $4,389,900 Water distribution system improvements $1,061,720 $0 $1,061,720 Sanitary sewer collection system improvements $1,881,296 $0 $1,881,296 Storm sewer collection system improvements $1,733,872 $0 $1,733,872 Landscaping improvements $1,830,501 $0 $1,830,501 Duct bank improvements $733,954 $0 $733,954 Other costs (See Appendix B for details) $8,694,755 $0 $8,694,755 Parking facility improvements $0 $6,160,000 $6,160,000 Total — Estimated Authorized Improvement Costs $20,325,998 $6,160,000 $26,485,998 The detailed cost estimates are provided as Appendix B to this Service and Assessment Plan. The costs shown in Table III -A are current estimates and may be revised in Annual Service Plan Updates. Savings from one line item may be applied to a cost increase of an Authorized Improvement in another line item, to construct additional Authorized Improvements or to pay debt service on the Bonds, as determined by the Town. 12 Res 14-45 Exhibit Section IV SERVICE PLAN A. Sources and Uses of Funds The PID Act requires the service plan to cover a period of at least five years. The service plan is required to define the annual projected costs and indebtedness for the Authorized Improvements undertaken within the PID during the five year period. It is anticipated that it will take approximately 24 to 36 months for Improvement Project A to be constructed. The Authorized Improvement Costs of Improvement Project A and Improvement Project B, including costs related to the issuance of the Bonds and payment of expenses incurred in the establishment, administration and operation of the PID, are estimated at $36,390,000 as shown in Table IV -A. Improvement Project A is anticipated to be funded with the Series 2015 Bonds and a Reimbursement Agreement in the total amounts of $26,175,000 and $3,400,000, respectively, as shown in Table IV -A. Improvement Project B is anticipated to be funded in the total amount of $2,425,000, which shall be funded through a deferred Assessment Part B, as shown in Table IV -A. The service plan shall be reviewed and updated at least annually for the purpose of determining the annual budget for Administrative Expenses, updating the estimated Authorized Improvement costs, and updating the Assessment Rolls. Any update to this Service and Assessment Plan is herein referred as an "Annual Service Plan Update." Table IV -A summarizes the estimated sources and uses of funds required to construct the Authorized Improvements, establish the PID, and issue the Bonds. The sources and uses of funds shown in Table V-A shall be updated each year in the Annual Service Plan Update to reflect any changes including budget revisions and Actual Costs. The Bonds shown in Table IV -A (the "Series 2015 Bonds") are anticipated to be issued starting early 2015 and will be used to pay and/or reimburse the Developer for a portion of Improvement Project A. The remaining costs of Improvement Project A will be financed through a Reimbursement Agreement dated as of (the "Reimbursement Agreement"), which is anticipated to be replaced by one or more series of future Bonds ("Future Bonds"). The Future Bonds are anticipated to be issued in 2017 after some or all of the Authorized Improvements are constructed and will be used to replace the Town's obligations under the Reimbursement Agreement to reimburse the Developer for the remaining portion of the costs of the Authorized Improvements. 13 Res 14-45 Exhibit Table IV -A Estimated Sources and Uses B. Annual Projected Costs and Annual Projected Indebtedness The annual projected costs and annual projected indebtedness is shown by Table IV -B. The annual projected costs and indebtedness are subject to revision and each shall be updated in the Annual Service Plan Update to reflect any changes in the costs or indebtedness expected for each year. 14 Res 14-45 Exhibit Deferred Series 2015 Reimbursement Assessment Total Bonds Agreement Part B Estimated Improvement Improvement Improvement Authorized Sources of Funds Project A Project A Project B Improvements Estimated Bond par amount $26,175,000 $3,400,000 $2,425,000 $32,000,000 Developer funds $0 $0 $4,390,000 $4,390,000 $26,175,000 $3,400,000 $6,815,000 $36,390,000 Total Sources Uses of Funds Authorized Improvements Road improvements $3,767,430 $622,470 $0 $4,389,900 Water distribution system improvements $890,040 $171,680 $0 $1,061,720 Sanitary sewer improvements $1,531,196 $350,100 $0 $1,881,296 Storm drainage improvements $1,154,306 $579,566 $0 $1,733,872 Landscaping improvements $1,830,501 $0 $0 $1,830,501 Duct bank improvements $640,304 $93,650 $0 $733,954 Other costs (See Appendix B) $8,195,623 $499,132 $0 $8,694,755 Parking facility improvement $0 $0 $6,160,000 $6,160,000 $18,009,400 $2,316,598 $6,160,000 $26,485,998 Subtotal Bond issue costs Capitalized interest $3,664,500 $238,000 $364,125 $4,072,500 Debt service reserve $2,225,600 $340,000 $485,500 $2,808,100 Other Bond issuance related costs $2,275,500 $505,402 $485,500 $3,023,402 $8,165,600 $1,083,402 $1,335,125 $9,904,002 Subtotal Total Uses $26,175,000 $3,400,000 $69815,000 $36,390,000 B. Annual Projected Costs and Annual Projected Indebtedness The annual projected costs and annual projected indebtedness is shown by Table IV -B. The annual projected costs and indebtedness are subject to revision and each shall be updated in the Annual Service Plan Update to reflect any changes in the costs or indebtedness expected for each year. 14 Res 14-45 Exhibit Table IV -B Annual Projected Costs and Annual Projected Indebtedness Year Annual Projected Cost Annual Projected Indebtedness Sources other than PID Bonds 2014 $0 $0 $0 2015 $26,175,000 $26,175,000 $0 2016 $0 $0 $0 2017 $3,400,000 $3,400,000 $0 2018 $6,815,000 $2,425,000 $4,390,000 Total $36,390,000 $32,000,000 $4,390,000 The annual projected costs shown in Table IV -B are the annual expenditures relating to the Authorized Improvement Costs shown in Table III -A, including costs associated with setting up the PID and Bond issuance costs, shown in Table IV -A. The difference between the total projected cost and the total projected indebtedness is the amount contributed by the Developer. The Town obtained an estimate of the cost of the Authorized Improvements, specifically, the parking garage, and an estimate of the appraised value of the property within the PID. As a result, the Town may, in compliance with the PID Act, in the Assessment Ordinance, defer the levy of an assessment to pay for the parking garage until a future date, specifically, at the date that the Town gives its final approval to a site plan and construction drawings for the construction of the Parking Garage. The estimated costs and related indebtedness for Improvement Project B are not shown in Table IV -B as a result of the Assessment Part B deferral. C. Maintenance of the Authorized Improvements Administrative and operation expenses of the PID shall include the expenses of maintaining and repairing the Authorized Improvements other than the water distribution system improvements, sanitary system improvements and duct bank extension in order to operate and maintain the applicable Authorized Improvements in a manner consistent with the Town's standards for maintenance of similar public improvements throughout the Town and as further described in the Development Agreement with the Developer dated as of The Town shall be responsible for the maintenance and repair expenses of the water distribution system improvements, sanitary system improvements and duct bank extension. The Annual Installments may include in Administrative Expenses a Maintenance Assessment as described in V.C.3 to pay such expenses. The Town may enter into an agreement (a "Maintenance Agreement") with a Property Owners' Association ("POA") wherein the POA agrees to operate, maintain and repair the applicable Authorized Improvements in accordance with the standards set forth in the Maintenance Agreement. In the event the POA fails to operate, maintain and repair the applicable Authorized Improvements in accordance with the standards set forth in the Maintenance Agreement, the Town may operate, maintain and repair the applicable Authorized Improvements or contract with another third party to operate, maintain and repair the applicable Authorized Improvements. 15 Res 14-45 Exhibit Section V ASSESSMENT PLAN A. Introduction The PID Act requires the Town Council to apportion the PID Costs on the basis of special benefits conferred upon the property because of the Authorized Improvements. The PID Act provides that the PID Costs may be assessed: (i) equally per front foot or square foot; (ii) according to the value of the property as determined by the governing body, with or without regard to improvements on the property; or (iii) in any other manner that results in imposing equal shares of the cost on property similarly benefited. The PID Act further provides that the governing body may establish by ordinance or order reasonable classifications and formulas for the apportionment of the cost between the municipality and the area to be assessed and the methods of assessing the special benefits for various classes of improvements. This section of this Service and Assessment Plan describes the special benefit received by each Parcel within the PID as a result of the Authorized Improvements, provides the basis and justification for the determination that this special benefit exceeds the amount of the Assessments, and establishes the methodologies by which the Town Council allocates and reallocates the special benefit of the Authorized Improvements to Parcels in a manner that results in equal shares of the Actual Costs being apportioned to Parcels similarly benefited. The determination by the Town Council of the assessment methodologies set forth below is the result of the discretionary exercise by the Town Council of its legislative authority and governmental powers and is conclusive and binding on the Developer and all future owners and developers of the Assessed Property. For purposes of this Service and Assessment Plan, the Town Council has determined that the Authorized Improvement Costs shall be allocated to the Assessed Property as described below: 1. The Authorized Improvement Costs for Improvement Project A and Improvement Project B shall be allocated to the Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property respectively, on the basis of the total estimated improvement costs that benefit each Improvement Area ("Direct Improvement Costs") and the improvement costs that benefit the entire PID ("Common Improvement Costs), as allocated to each Improvement Area based on the ratio of the Direct Improvement Costs of each Improvement Area, and that such method of allocation will result in the imposition of equal shares of the Authorized Improvement Costs to Parcels similarly benefited. 2. The Town Council has concluded that larger more expensive homes are likely to be built on the larger lots, and that larger more expensive homes are likely to make greater use of and receive greater benefit from the Authorized Improvements. In determining the relative construction costs of Parcels, the Town Council has taken in to consideration (i) the type of development (i.e., residential, commercial, etc), (ii) residential lot sizes and the size of homes likely to be built on lots of different sizes, (iii) current and projected construction costs per square foot as provided by the Developer, (iv) the Authorized Improvements to be provided and the estimated costs, and (v) the ability of different property types to utilize and benefit from the improvements. 16 Res 14-45 Exhibit 3. The Assessed Property is classified into different Land Use Classes as described in Appendix D based on the type and size of proposed development on each Parcel. 4. Equivalent Units are calculated for each Land Use Class in each Improvement Area based on the relative average construction cost per unit of each Land Use Class as shown in Appendix D. The average construction cost for each Land Use Class in each Improvement Area is calculated based on the estimated average square feet of each unit of residential Land Use Class or 1,000 square feet of each commercial Land Use Class, as applicable, and the estimated average construction cost per square foot of each Land Use Class. 5. The Authorized Improvement Costs of Improvement Project A and Improvement Project B that benefit the Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property, respectively, are proportionally allocated based on the total Equivalent Units estimated for each Parcel of Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property. Table V-A provides the estimated allocation of costs of the Authorized Improvements. B. Special Benefit Assessed Property must receive a direct and special benefit from the Authorized Improvements, and this benefit must be equal to or greater than the amount of the Assessments. For the purpose of this Service and Assessment Plan, special benefit means a specific and localized benefit, and a quantifiable amount of benefit, that infrastructure has on a tract of land. An example is a roadway providing a specific benefit to the tracts of land immediately in the vicinity of the roadway, for without its construction, the tracts near a proposed roadway would likely remain underdeveloped. The quantifiable benefit may be expressed as the increased value of the land and improvements located on the land because of the placement of public infrastructure near that land. The Authorized Improvements (more particularly described in line -item format in Appendix B to this Service and Assessment Plan) and the costs of issuance and payment of costs incurred in the establishment of the PID shown in Table IV -A are authorized by the Act. These improvements are provided specifically for the benefit of the Assessed Property. Each owner of the Assessed Property has acknowledged that the Authorized Improvements confer a special benefit on the Assessed Property and has consented to the imposition of the Assessments to pay for the Actual Costs associated therewith. Pursuant to the Landowner's Agreement, each owner of the Assessed Property has ratified, confirmed, accepted, agreed to and approved; (i) the determinations and finding by the Town Council as to the special benefits described in this Service and Assessment Plan and the Assessment Ordinance; (ii) the Service and Assessment Plan and the Assessment Ordinance, and (iii) the levying of Assessments on the Assessed Property. Each of the owners is acting in its interest in consenting to this apportionment and levying of the Assessments because the special benefit conferred upon the Assessed Property by the Authorized Improvements exceeds the amount of the Assessments. The public improvements provide a special benefit to the Assessed Property as a result of the close proximity of these improvements to the Assessed Property and the specific purpose of 17 Res 14-45 Exhibit these improvements of providing infrastructure for the Assessed Property so that the property may be developed as proposed. In other words, the Assessed Property could not be used in the manner proposed without the construction of the Authorized Improvements. The Authorized Improvements are being provided specifically to meet the needs of the Assessed Property as required for the proposed use of the property. The Assessments are being levied to provide the Authorized Improvements that are required for the highest and best use of the Assessed Property (i.e., the use of the property that is most valuable, including any costs associated with that use). Highest and best use can be defined as "the reasonably probable and legal use of property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value." (Dictionary of Real Estate Appraisal, Third Edition.) The Authorized Improvements are expected to be required for the proposed use of the Assessed Property to be physically possible, appropriately supported, financially feasible, and maximally productive. The Developer has evaluated the potential use of the property and has determined that the highest and best use of the property is the use intended and the legal use for the property as described in Section II of this Service and Assessment Plan. The use of the Assessed Property as described herein will require the construction of the Authorized Improvements. The special assessments will repay financing that is on advantageous terms, as the Bonds issued to finance the public improvements will pay interest that is exempt from federal income tax. As a result, all other terms being equal (e.g., maturity, fixed vs. variable rate, risk and credit quality), the tax-exempt bonds will have a lower interest rate than debt that is not tax-exempt. Use of the Assessed Property as described in this Service and Assessment Plan and as authorized by the Zoning Ordinance requires that Authorized Improvements be acquired, constructed, installed, or improved. Funding the Actual Costs through the PID has been determined by the Town Council to be the most beneficial means of doing so. Since the Authorized Improvements are required for the highest and best use of the property, and the PID provides the most beneficial means of financing the Authorized Improvements, the improvements provided by the PID will be equal to or greater than the cost of the Assessments levied on the property. Accordingly, the Assessments result in a special benefit to the Assessed Property, and this special benefit exceeds the amount of the Assessments. This conclusion is based on and supported by the evidence, information, and testimony provided to the Town Council. In summary, the Assessments result in a special benefit to the Assessed Property for the following reasons: 1. The Authorized Improvements are being provided specifically for the use of the Assessed Property and a special benefit to the Assessed Property as a result; 2. The Developer has consented to the imposition of the Assessments for the purpose of providing the Authorized Improvements and the Developer is acting in its interest by consenting to this imposition; IN Res 14-45 Exhibit 3. The Authorized Improvements are required for the highest and best use of the property; 4. The highest and best use of the Assessed Property is the use of the Assessed Property that is most valuable (including any costs associated with the use of the Assessed Property); 5. Financing of the PID Costs by establishing the PID is determined to be the most beneficial means of providing for the Authorized Improvements; and, 6. As a result, the special benefits to the Assessed Property from the Authorized Improvements will be equal to or greater than the Assessments. C. Assessment Methodology C1 Assessment Part A The Actual Costs of Improvement Project A may be assessed using any methodology that results in the imposition of equal shares of the Actual Costs on the Assessed Property in each Improvement Area similarly benefited. For purpose of this Service and Assessment Plan, the Town Council has determined that the Actual Costs of Improvement Project A to be financed with the Series 2015 Bonds and the Reimbursement Agreement shall be allocated to the Improvement Area #1 Assessed Property by spreading the entire Assessment Part A across the Parcels based on the estimated Equivalent Units as calculated and shown in Appendix D using the types and number of lots anticipated to be developed on each Parcel of the Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property. As part of the determination as to the ability of different Land Use Classes to utilize and benefit from the Authorized Improvements, the Town Council has taken into consideration that larger, more expensive homes, on average, will create more vehicle trips and greater demands for water and wastewater consumption, and larger, more expensive homes are likely to be built on larger, more valuable lots. Based on the estimates of the costs of Improvement Project A that benefit the Assessed Property in all Improvement Areas, as provided by G&A Consultants, LLC., and set forth in Table III -A, the Town Council has determined that the benefit to the Assessed Property in each Improvement Area, is at least equal to the Assessment Part A levied on the Assessed Property in each Improvement Area. The Assessment Part A and Annual Installment Part A for each Parcel or Lot of the Assessed Property in each Improvement Area are shown on the Assessment Rolls, attached as Appendix E, and no Assessment Part A shall be changed except as authorized by this Service and Assessment Plan or the PID Act. Upon subdivisions of any Parcel, the Assessment Part A applicable to a Parcel will be apportioned pro rata to the resulting Parcels based on the Equivalent Units of each newly created Parcel. For residential Lots, when final residential building sites are platted, Assessment Part A will be apportioned proportionately among each Land Use Class based on the ratio of the Equivalent Unit applicable to each Land Use Class at the time Lots are platted to the total Equivalent Units of all Lots in the platted Parcel, as determined by the Administrator and confirmed by the Town Council. The result of this approach is that each final Lot within a recorded subdivision plat with similar values will have the same Assessment Part A, with larger, 19 Res 14-45 Exhibit more valuable Lots having a proportionately larger share of the Assessments than smaller, less valuable Lots. The detailed calculation of the Equivalent Units and allocation of Assessment Part A to each Improvement Area is shown in Appendix D. Table V-A below sets forth a summary of Assessment Part A per unit for each of the Land Use Classes in each Improvement Area of the PID. Table V-A Assessment Part A per Unit C.2 Assessment Part B The Actual Costs of Improvement Project B may be assessed using any methodology that results in the imposition of equal shares of the Actual Costs on Improvement Area #1 Assessed Property similarly benefited. The Town obtained an estimate of the cost of the Authorized Improvements, specifically, the parking garage, and an estimate of the appraised value of the property within the PID. As a result, the Town may, in compliance with the PID Act, in the Assessment Ordinance, defer the levy of an assessment to pay for the parking garage until a future date, specifically, at the date that the Town gives its final approval to a site plan and construction drawings for the construction of the Parking Garage. The methodology for allocating Assessment Part B to each 20 Res 14-45 Exhibit Assessment Planned Part A per Equivalent Total No. of Equivalent Unit Assessment Type Units Unit Factor Assessment Part A per Unit Part A Improvement Area #1 Land Use Class 1 38 $58,797.94 1.00 $58,797.94 per dwelling unit $2,234,321.65 Land Use Class 2 71 $58,797.94 0.62 $36,454.72 per dwelling unit $2,588,285.24 Land Use Class 3 6 $58,797.94 0.60 $35,278.76 per dwelling unit $211,672.58 Land Use Class 10 372.10 $58,797.94 0.22 $12,935.55 per 1,000 Sq. Ft $4,813,303.88 Land Use Class 11 266.10 $58,797.94 0.20 $11,759.59 per 1,000 Sq. Ft $3,129,226.27 Land Use Class 12 255.50 $58,797.94 0.21 $12,347.57 per 1,000 Sq. Ft $3,154,803.37 Land Use Class 13 264.60 $58,797.94 0.19 $11,171.61 per 1,000 Sq. Ft $2,956,007.55 Subtotal: Improvement Area #1 $19,087,620.54 Improvement Area #2 Land Use Class 4 42 $63,349.00 1.00 $63,349.00 per dwelling unit $2,660,658.15 Land Use Class 5 16 $63,349.00 0.68 $43,077.32 per dwelling unit $689,237.16 Land Use Class 6 69 $63,349.00 0.52 $32,941.48 per dwelling unit $2,272,962.25 Subtotal: Improvement Area #2 $5,622,857.55 Improvement Area #3 Land Use Class 7 21 $86,189.26 1.00 $86,189.26 per dwelling unit $1,809,974.49 Land Use Class 8 23 $86,189.26 0.68 $58,608.70 per dwelling unit $1,348,000.05 Land Use Class 9 36 $86,189.26 0.52 $47,404.09 per dwelling unit $1,706,547.37 Subtotal: Improvement Area #3 $4,864,521.90 Grand Total Assessment Part A $29,575,000.00 C.2 Assessment Part B The Actual Costs of Improvement Project B may be assessed using any methodology that results in the imposition of equal shares of the Actual Costs on Improvement Area #1 Assessed Property similarly benefited. The Town obtained an estimate of the cost of the Authorized Improvements, specifically, the parking garage, and an estimate of the appraised value of the property within the PID. As a result, the Town may, in compliance with the PID Act, in the Assessment Ordinance, defer the levy of an assessment to pay for the parking garage until a future date, specifically, at the date that the Town gives its final approval to a site plan and construction drawings for the construction of the Parking Garage. The methodology for allocating Assessment Part B to each 20 Res 14-45 Exhibit Parcel in Improvement Area #1 will be provided as part of an Annual Service Plan Update at the Assessment Part B is levied. C.3 Maintenance Assessment The annual Maintenance Assessment may be assessed using any methodology that results in the imposition of equal shares of the Maintenance Assessment on Assessed Property similarly benefited. For purpose of this Service and Assessment Plan, the Town Council has determined that the Maintenance Assessment to be collected in any given year shall be allocated to each Improvement Area based on a ratio of the total Equivalent Units for each Improvement Area. In recognition of the higher traffic generated by the non-residential Land Use Classes in Improvement Area #1 as compared to the residential Land Use Classes, the Town has determined approximately 65% of the total Maintenance Assessment allocated to Improvement Area #1 will be collected from the non-residential Land Use Classes and the remaining 35% of the total Maintenance Assessment allocated to Improvement Area #1 will be collected from the residential Land Use Classes. The total amount of Maintenance Assessment allocated to the non- residential Land Use Classes in Improvement Area #1 will then be allocated to each Land Use Class based on the relative Equivalent Unit of each Land Use Class. The total amount of Maintenance Assessment allocated to the residential Land Use Classes in Improvement Area #1 will be allocated to each residential unit equally based on the number of units. The total amount of Maintenance Assessment allocated to Improvement Area #2 and Improvement Area #3 will also be allocated to each residential unit equally based on the number of units. D. Assessments The Assessments for the Authorized Improvements will be levied on each Parcel according to the Assessment Rolls, attached hereto as Appendix E. The Assessment Part A and Assessment Part B on each Parcel was allocated as explained above based on the development to occur on each Parcel and the Assessment per unit by Land Use Class. The Annual Installment Part A and Annual Installment Part B will be collected at the time and in the amounts shown on the Assessment Rolls, subject to any revisions made during an Annual Service Plan Update. E. Administrative Expenses The cost of administering the PID and collecting the Annual Installments shall be paid for on a pro rata basis by each Parcel based on the amount of Assessment levied against the Parcel. The Administrative Expenses shall be collected as part of and in the same manner as Annual Installments in the amounts shown on the Assessment Roll, which may be revised based on actual costs incurred in Annual Service Plan Updates. Administrative Expenses other than Maintenance Assessments shall be allocated among Parcels in proportion to the amount of the respective Annual Installments for the Parcels. G. Additional Interest Pursuant to the PID Act, the interest rate for Assessments may exceed the actual interest rate per annum paid on the Bonds by no more than one half of one percent (0.50%). The interest rate used to determine the Assessments is one half of one percent (0.50%) per annum higher than the actual rate paid on the Bonds. The Town may allocate up to 0.50% of the interest rate component 21 Res 14-45 Exhibit of the Annual Installments to pay for a prepayment reserve, delinquency reserve, Administrative Expenses, improvement costs, any other use that benefits the Assessed Property or reduce the Assessments, as determined by the Town Council. Prepayment Reserve The Town Council has provided for up to 0.20% of the additional interest may be allocated to fund the associated interest charged between the date of prepayment of an Assessment and the date on which Bonds are prepaid. The actual amount of the additional interest to be set aside in the prepayment reserve shall be determined in the Annual Service Plan Updates in accordance with the provisions of the Bond Indentures. 2. Delinquency Reserve Up to 0.30% of the additional interest component of the Annual Installments may be allocated to offset any possible delinquent payments. The actual amount of the additional interest to be set aside in the delinquency reserve shall be determined in the Annual Service Plan Updates in accordance with the provisions of the Bond Indentures. 22 Res 14-45 Exhibit Section VI TERMS OF THE ASSESSMENTS A. Amount of Assessments and Annual Installments The Assessments and Annual Installments for each Parcel of Assessed Property located within the PID are shown on the Assessment Rolls, attached as Appendix E, and no Assessment shall be changed except as authorized by this Service and Assessment Plan and the PID Act. The Annual Installments shall be collected in an amount sufficient to pay principal and interest on the Bonds and amounts payable pursuant to the Reimbursement Agreement, to fund the prepayment reserve and delinquency reserve described in Section V and to pay Administrative Expenses. The annual Maintenance Assessments shall be collected in an amount sufficient to pay the estimated costs of maintenance included in the Authorized Improvements maintenance budget for the year and/or an amount sufficient to replenish withdrawals during the previous year(s), if any, from any funds or accounts established and maintained for such purpose. B. Reallocation of Assessments 1. Subdivision Upon the subdivision of any Parcel, the Assessment Part A for the Parcel prior to the subdivision shall be reallocated among the new subdivided Parcels according to the following formula: A=Bx(C=D) Where the terms have the following meanings: A = the Assessment Part A for each new subdivided Parcel B = the Assessment Part A for the Parcel prior to subdivision C = the estimated Equivalent Units to be built on each new subdivided Parcel D = the sum of the estimated Equivalent Units to be built on all of the new subdivided Parcels Similarly, upon the subdivision of any Parcel, the Assessment Part B for the Parcel prior to the subdivision, if any, shall be reallocated among the new subdivided Parcels according to the following formula: A=Bx(C=D) Where the terms have the following meanings: A = the Assessment Part B for each new subdivided Parcel B = the Assessment Part B for the Parcel prior to subdivision C = the estimated Equivalent Units to be built on each new subdivided Parcel 23 Res 14-45 Exhibit D = the sum of the estimated Equivalent Units to be built on all of the new subdivided Parcels The calculation of the estimated number of units to be built on a Parcel shall be performed by the Administrator and confirmed by the Town Council based on the information available regarding the use of the Parcel. The estimate as confirmed shall be conclusive. The number of units to be built on a Parcel may be estimated by net land area and reasonable density ratios. The sum of the Assessment Part A for all newly subdivided Parcels shall equal the Assessment Part A for the Parcel prior to subdivision. The calculation shall be made separately for each newly subdivided Parcel. The reallocation of an Assessment Part A for a Parcel that is a homestead under Texas law may not exceed the Assessment Part A prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the parry requesting the subdivision of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. Similarly, the sum of the Assessment Part B for all newly subdivided Parcels shall equal the Assessment Part A for the Parcel prior to subdivision. The calculation shall be made separately for each newly subdivided Parcel. The reallocation of an Assessment Part B for a Parcel that is a homestead under Texas law may not exceed the Assessment Part B prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the party requesting the subdivision of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. 2. Consolidation Upon the consolidation of two or more Parcels, the Assessment Part A for the consolidated Parcel shall be the sum of the Assessment Part A for the Parcels prior to consolidation. The reallocation of an Assessment Part A for a Parcel that is a homestead under Texas law may not exceed the Assessment Part A prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the party requesting the consolidation of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. Similarly, upon the consolidation of two or more Parcels, the Assessment Part B for the consolidated Parcel shall be the sum of the Assessment Part B for the Parcels prior to consolidation. The reallocation of an Assessment Part B for a Parcel that is a homestead under Texas law may not exceed the Assessment Part B prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the party requesting the consolidation of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. 3. Payment of Excess Assessment If a subdivision of a Parcel or consolidation of Parcels results in a reallocated Assessment Part A or Assessment Part B for a Parcel that would exceed the respective Assessment per Equivalent Unit shown in this Service and Assessment Plan for the applicable Land Use Class (the "Maximum Assessment"), the owner shall pay to the Town at the time of the subdivision or consolidation the amount by which the reallocated Assessment for the Parcel exceeds the 24 Res 14-45 Exhibit Maximum Assessment plus, if applicable, accrued interest through the date of such payment. Prepayment Costs, if any, that result from such owner -initiated subdivision or consolidation shall be paid by the owner to the Town at the time of the subdivision or consolidation. The Town Council will not approve for recordation any subdivision plat within the PID until subdivision regulation and platting requirements are fulfilled and the Administrator has notified the Town Council in writing that (a) the plat does not contain any Parcels for which the Assessment exceeds the Maximum Assessment, or (b) the appropriate payment has been received by the Town for any Parcel for which the allocated Assessment would have exceeded the Maximum Assessment. Payments made by an owner pursuant to this section shall be used to reduce the outstanding principal amount of Bonds and reduce the Assessments and Annual installments for the affected Parcels, which reductions shall be calculated by the Administrator in accordance with the applicable Bond Indenture and approved by the Town Council in the next Annual Service Plan Update. If Bonds have not been issued, payments made by an owner pursuant to this section shall be used to reduce the outstanding principal due under the Reimbursement Agreement and reduce the Assessments and Annual Installments for the affected Parcels, which reductions shall be calculated by the Administrator and approved by the Town Council in the next Annual Service Plan Update. C. Mandatory Prepayment of Assessments 1. If at any time the Assessment per Equivalent Unit on a Parcel exceeds the Maximum Assessment calculated in this Service and Assessment Plan as a result of any changes in Land Use Class, subdivision, consolidation or reallocation of the Assessment authorized by this Service and Assessment Plan and initiated by the owner of the Parcel, then such owner shall pay to the Town prior to the recordation of the document subdividing the Parcel the amount calculated by the Administrator by which the Assessment per Equivalent Unit for the Parcel exceeds the Maximum Assessment calculated in this Service and Assessment Plan. The Town shall not approve the recordation of a plat or other document subdividing a Parcel without a letter from the Administrator either (a) confirming that the Assessment per Equivalent Unit for any new Parcel created by the subdivision will not exceed the Maximum Assessment for each Parcel, or (b) confirming the payment of the Assessments, plus all Prepayment Costs, as provided for herein. 2. If a Parcel subject to Assessment Part A and/or Assessment Part B is transferred to a parry that is exempt from the payment of the Assessments under applicable law, or if an owner causes a Parcel subject to Assessments to become Non -Benefited Property, the owner of such Parcel shall pay to the Town the full amount of the Assessment Part A and/or Assessment Part B on such Parcel, plus all Prepayment Costs, prior to any such transfer or act. 3. The payments required above shall be treated the same as any Assessment that is due and owing under the Act, the Assessment Ordinance, and this Service and Assessment Plan, including the same lien priority, penalties, procedures, and foreclosure specified by the Act. D. Reduction of Assessments 25 Res 14-45 Exhibit 1. If after all Authorized Improvements to be funded with a series of Bonds have been completed and Actual Costs for such Authorized Improvements are less than the Actual Costs used to calculate the Assessments securing such series of Bonds, resulting in excess Bond proceeds being available to redeem Bonds of such series, then the Assessment securing such series of Bonds for each Parcel of Assessed Property shall be reduced by the Town Council pro rata such that the sum of the resulting reduced Assessments for all Assessed Properties equals the actual reduced Actual Costs and such excess Bond proceeds shall applied to redeem Bonds of such series. The Assessments shall not be reduced to an amount less than the related outstanding series of Bonds. 2. If all the Authorized Improvements are not undertaken, resulting in excess Bond proceeds being available to redeem Bonds, then the Assessments and Annual Installments for each Parcel shall be appropriately reduced by the Town Council to reflect only the amounts required to repay the Bonds, including interest on the Bonds and Administrative Expenses, and such excess Bond proceeds shall be applied to redeem Bonds. The Town Council may reduce the Assessments and the Annual Installments for each Parcel (i) in amounts that would result in the Assessments and Annual Installments to more accurately reflect the Authorized Improvements provided for each Parcel, (ii) by an equal percentage calculated based on Equivalent Units, or (iii) in another method if the Town Council determines such method would better reflect the benefit received by the Parcels from the Authorized Improvements provided to the Parcels. E. Payment of Assessments 1. Payment in Full (a) The Assessment Part A and/or Assessment Part B for any Parcel may be paid in full at any time. Such payment shall include all Prepayment Costs. If prepayment in full will result in redemption of Bonds, the payment amount shall be reduced by the amount, if any, of reserve funds applied to the redemption under the Trust Indenture, net of any other costs applicable to the redemption of Bonds. (b) If an Annual Installment has been billed prior to payment in full of an Assessment, the Annual Installment shall be due and payable and shall be credited against the payment -in -full amount. (c) Upon payment in full of the Assessment and all Prepayment Costs, the Town shall deposit the payment in accordance with the Trust Indenture; whereupon, the Assessment shall be reduced to zero, and the owner's obligation to pay the Assessment and Annual Installments thereof shall automatically terminate. (d) At the option of the owner, the Assessment Part A and/or Assessment Part B on any Parcel plus Prepayment Costs may be paid in part at any time. Such prepayment shall include all Prepayment Costs. Upon the payment of such amounts for a Parcel, the respective Assessment for the Parcel shall be reduced, the Assessment Roll shall be updated to reflect such partial payment, and the obligation to pay the respective Annual Installment for such Parcel shall be reduced to the extent the partial payment is made. 26 Res 14-45 Exhibit 2. Payment in Annual Installments The Act provides that an Assessment for a Parcel may be paid in full at any time. If not paid in full, the Act authorizes the Town to collect interest, administrative expenses and other authorized charges in Annual Installments. An Assessment for a Parcel that is not paid in full will be collected in Annual Installments each year in the amounts shown in the Assessment Rolls, as updated as provided for herein, which include interest, Administrative Expenses, prepayment reserve and delinquency reserve. Payment of the Annual Installments shall commence with tax bills mailed after the initial issuance of Bonds. Each Assessment shall include an interest component of equal to (i) the actual interest rate paid on the Bonds and (ii) up to 0.5% per annum. The Assessment Roll sets forth for each year the Annual Installment for each Parcel based on an estimated interest rate of 7% on the Series 2015 Bonds, an estimated interest rate of 6.72% on the Reimbursement Agreement and additional interest at the rate of 0.5% for administrative expenses, prepayment reserve and delinquency reserve. Furthermore, the Annual Installments may not exceed the amounts shown on the Assessment Rolls. The Assessment Rolls, to be updated with the actual interest rates on the Bonds and the Reimbursement Agreement once the Bonds are issued and/or the Reimbursement Agreement is executed, are shown as Appendix E. The Annual Installment Part A and Annual Installment Part B shall be reduced in the Service and Assessment Plan or Annual Service Plan Updates to equal the actual costs of repaying the Bonds, the Reimbursement Agreement and actual Administrative Expenses (as provided for in the definitions of such terms), taking into consideration any other available funds for these costs, such as interest income on account balances. The Town reserves and shall have the right and option to refund the Bonds in accordance with Section 372.027 of the PID Act. In the event of such refunding, the Administrator shall recalculate the Annual Installments and , and if necessary, may adjust the amount of the Annual Installments so that total Annual Installments of Assessments will be produced in annual amounts that are required to pay the refunding bonds when due and payable as required by and established in the ordinance and/or the indenture authorizing and securing the refunding bonds, and such refunding bonds shall constitute Bonds for purposes of this Service and Assessment Plan. F. Collection of Annual Installments No less frequently than annually, the Administrator shall prepare, and the Town Council shall approve, an Annual Service Plan Update to allow for the billing and collection of Annual Installments Part A, Annual Installments Part B and annual Maintenance Assessments, if any. Each Annual Service Plan Update shall include updated Assessment Rolls and calculations of the Annual Installment Part A, Annual Installment Part B and Annual Parcel Maintenance Assessment for each Parcel. Each Annual Installment shall be reduced by any credits applied under the applicable Trust Indenture, such as capitalized interest, interest earnings on any account balances, and any other funds available to the Trustee for such purpose, including any existing deposits for a prepayment reserve. Annual Installments and annual Maintenance Assessments shall be collected by the Town in the same manner and at the same time as ad 27 Res 14-45 Exhibit valorem taxes and shall be subject to the same penalties, procedures, and foreclosure sale in case of delinquencies as are provided for ad valorem taxes of the Town. The Town Council may provide for other means of collecting the Annual Installments and annual Maintenance Assessments to the extent permitted under the PID Act. The Assessments shall have lien priority as specified in the Act. Any sale of property for nonpayment of the Annual Installments shall be subject to the lien established for the remaining unpaid Annual Installments against such property and such property may again be sold at a judicial foreclosure sale if the purchaser thereof fails to make timely payment of the non -delinquent Annual Installments against such property as they become due and payable. Any parry taking title to a Parcel, including a buyer at a foreclosure sale, shall take title to the Parcel subject to the obligation to pay the Assessment on such Parcel thereafter as provided for herein. If for any reason the Assessment may not be collected thereafter, the Assessment for the Parcel, along with other charges and credits as would apply for a prepayment of the Assessment, shall be due and payable at the time of the transfer without further action required by the Town Council. Res 14-45 Exhibit Section VII THE ASSESSMENT ROLL A. The Assessment Roll Each Parcel within the PID has been evaluated by the Town Council (based on the Zoning Ordinance, developable area, proposed Property Owner Association Property and Public Property, the Authorized Improvements, best and highest use of land, and other development factors deemed relevant by the Town Council) to determine the Assessed Property within each Parcel. The Assessed Property in each Improvement Area will be assessed for the special benefits conferred upon the property as a result of the Authorized Improvements that benefit the property within each Improvement Area of the PID. Table IV -A summarizes the $36,390,000 in special benefit received by the Assessed Property from the Authorized Improvements, the costs of the PID formation, and Bond issuance costs. The total amount of the Bonds and the Reimbursement Agreement is $29,575,000, which is less than the benefit received by the Assessed Property, and as such the total Assessment Part A for Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property is $29,575,000. The total amount of deferred Assessment Part B for Improvement Area #1 Assessed Property is $2,425,000, which shall be collected with annual Administrative Expenses and other authorized charges once levied. The Assessment Part A for each Parcel of Assessed Property in each Improvement Area is calculated based on the allocation methodologies described in Section V.0 and Appendix D of this Service and Assessment Plan. The Assessment Rolls for each Improvement Area are attached hereto as Appendix E. B. Annual Assessment Roll Updates The Administrator shall prepare, and shall submit to the Town Council for approval, annual updates to the Assessment Rolls in conjunction with the Annual Service Plan Update to reflect the following matters, together with any other changes helpful to the Administrator or the Town and permitted by the Act: (i) the identification of each Parcel (ii) the Assessment for each Parcel of Assessed Property, including any adjustments authorized by this Service and Assessment Plan or in the PID Act; (iii) the Annual Installment for the Assessed Property for the year (if the Assessment is payable in installments); (iii) the annual Maintenance Assessment the Assessed Property for the year (if any); and (iv) payments of the Assessment, if any, as provided by Section VI.E of this Service and Assessment Plan. Once the Bonds are issued and/or the Reimbursement Agreement is executed, the Assessment Rolls shall be updated, which update may be done in the next Annual Service Plan Update, to reflect any changes resulting from the issuance of the Bonds and/or execution of the Reimbursement Agreement. This update shall reflect the actual interest on the Bonds and/or the Reimbursement Agreement on which the Annual Installments shall be paid, any reduction in the Assessments, and any revisions in the Actual Costs to be funded by the Bonds and/or the Reimbursement Agreement and Developer funds. 29 Res 14-45 Exhibit Section VIII MISCELLANEOUS PROVISIONS A. Administrative Review The Town may elect to designate a third party to serve as Administrator. The Town shall notify Developer in writing at least thirty (30) days in advance before appointing a third parry Administrator. To the extent consistent with the Act, an owner of an Assessed Parcel claiming that a calculation error has been made in the Assessment Roll(s), including the calculation of the Annual Installment, shall send a written notice describing the error to the Town not later than thirty (30) days after the date any amount which is alleged to be incorrect is due prior to seeking any other remedy. The Administrator shall promptly review the notice, and if necessary, meet with the Assessed Parcel owner, consider written and oral evidence regarding the alleged error and decide whether, in fact, such a calculation error occurred. If the Administrator determines that a calculation error has been made and the Assessment Roll should be modified or changed in favor of the Assessed Parcel owner, such change or modification shall be presented to the Town Council for approval to the extent permitted by the Act. A cash refund may not be made for any amount previously paid by the Assessed Parcel owner (except for the final year during which the Annual Installment shall be collected or if it is determined there are sufficient funds to meet the expenses of the PID for the current year), but an adjustment may be made in the amount of the Annual Installment to be paid in the following year. The decision of the Administrator regarding a calculation error relating to the Assessment Roll may be appealed to the Town Council. Any amendments made to the Assessment Roll(s) pursuant to calculation errors shall be made pursuant to the PID Act. The decision of the Administrator, or if such decision is appealed to the Town Council, the decision of the Town Council shall be conclusive as long as there is a reasonable basis for such determination. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any other appeal or legal action by such owner. B. Termination of Collection of Assessments Each Assessment shall be extinguished on the date the Assessment is paid in full, including unpaid Annual Installments. After the extinguishment of an Assessment and the collection of any delinquent Annual Installments and Delinquent Collection Costs, the Town shall provide the owner of the affected Parcel a recordable notice of the satisfaction and release of the Assessment. C. Amendments Amendments to the Service and Assessment Plan can be made as permitted or required by the PID Act and under Texas law. The Town Council reserves the right to the extent permitted by the Act to amend this Service and Assessment Plan without notice under the Act and without notice to property owners of Parcels: (i) to correct mistakes and clerical errors; (ii) to clarify ambiguities; and (iii) to provide 30 Res 14-45 Exhibit procedures for the collection and enforcement of Assessments, Prepayment Costs, Collection Costs, and other charges imposed by the Service and Assessment Plan. D. Administration and Interpretation of Provisions The Town Council shall administer the PID, this Service and Assessment Plan, and all Annual Service Plan Updates consistent with the PID Act, and shall make all interpretations and determinations related to the application of this Service and Assessment Plan unless stated otherwise herein or in the Trust Indenture, such determination shall be conclusive. E. Severability If any provision, section, subsection, sentence, clause or phrase of this Service and Assessment Plan or the application of same to an Assessed Parcel or any person or set of circumstances is for any reason held to be unconstitutional, void or invalid, the validity of the remaining portions of this Service and Assessment Plan or the application to other persons or sets of circumstances shall not be affected thereby, it being the intent of the Town Council in adopting this Service and Assessment Plan that no part hereof or provision or regulation contained herein shall become inoperative or fail by reason of any unconstitutionality, voidness or invalidity of any other part hereof, and all provisions of this Service and Assessment Plan are declared to be severable for that purpose. If any provision of this Service and Assessment Plan is determined by a court to be unenforceable, the unenforceable provision shall be deleted from this Service and Assessment Plan and the unenforceable provision shall, to the extent possible, be rewritten to be enforceable and to give effect to the intent of the Town. 31 Res 14-45 Exhibit DrgfZ Appendix A The PID MAP Res 14-45 Exhibit lP !] S� �29 elG O TEXAS �c IMPROVEMENT AREA COMMON -TO -ALL ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS c q SrrEPLANNMG fMEMMMM PLATETNG CONSULTANTS, LLC LANDSURVEYM LANDvSCAPBARCHnTcnJRE TBPEFinn No. 1798 111 Hillside Drive • Lewisville, TX 75057 • P: 972.435.9712 • F; 972.436.9715 TBPLS Finn 670 Byron Nelson Blvd. Ske 114 • Roanoke. TX 75262 • P: 682:831.9712 • F: si7.8 DA043 No. 10047700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500• JOB. NO. 12139 Res 14-45 Exhibit IMPROVEMENT AREA #1 MIXED USE VILLAGE CORE ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS SrMNANNWG aVELENGRiMMM M&TMG CONSULTANTS, LLC ���i LANUSWEAFi> H TBPF Firm 4wNo. 1798 111 Hillside Drive . Lewisville, TX 75057 • P: 972.435 9712 • F:: 972.436.9715 TBPLS Firm 810 Byron Nelson Blvd, Ste 114 • Roanoke, TX 76262 • P: 682.831.9712 • F. 817.890.4043 No. 10047700 DRAWN BY: JCM DATE: 05/14/2014 SCALE: 1"=500' JOB. N0. 12139 Res 14-45 Exhibit 4 1 n IMPROVEMENT AREA #2 WEST RESIDENTIAL ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS r ME PLANNING aviLENGEREERM PLATTMG CONSULTANTS, LLC LANDSU VEYM LANDSCAPEARCHITECIVRE >tBPE Firm No. 1798 111 Hillside Drive • Lewisville. TX 75057 - P: 972.436.9712 - F: 972.436.9715 TBPLS Flrm 610 Byron Nelson Blvd, Ste 114. Roanoke. TX 76262 - P: 682.831.9712 - F, 817.890.4043 No, 10047700 DRAWN BY: JCM DATE: 05/14/2014 SCALE: 1"=500' JOB. NO, 12139 Res 14-45 Exhibit �p n� CO 114 — TEXAS - - - — — 0 a l� ED <9 0 a� a IMPROVEMENT AREA #3 EAST RESIDENTIAL ENTRADA TOWN OF VWESTLAKE TARRANT COUNTY, TEXAS o cSffi'SPLANNWG GVILMCEXi PLATTING CONSULTANTS, LLC LANDSURVB M LANDSCALPEARCHURCTURR o� TBPE Flmt No. 1798 111 Hillside Drive - Lewisville. TX 75057 • P: 972.436.9712 • F: 972 436.9715 TBPLS Firm 610 Byron Nelson Blvd, Ste 114 • Roanoke, TX 76262 - P: 502.031.9712 • F: 817.090.4043 No. 10047700 Qu, " d DRAWN BY: JCM DATE: 05/14/2014 SCALE: 1"=500' JOB. NO. 12139 do Res 14-45 Exhibit DrgfZ Appendix B ESTIMATED COSTS OF AUTHORIZED IMPROVEMENTS Res 14-45 Exhibit Appendix B- Summary of Estimated Authorized Improvement Costs Notes: See attached engineering estimates for detailed line item budgets. The parking facilities improvement costs are estimated by the developer at $14,000 per parking space for approximately 440 parking spaces. Draft B-1 Res 14-45 Exhibit Improvement Project A Improvement Project B Total Estimated (to be to be funded (initially funded Total Authorized with Series 2015 with Reimbursement Improvement Authorized Improvement Improvement Costs Bonds) Agreement) Project A (Deferred Assessments) Road improvements Paving, Striping, Traffic signal $4,389,900 $3,767,430 $622,470 $4,389,900 $0 Water improvements Water distribution system improvements $1,061,720 $890,040 $171,680 $1,061,720 $0 Sanitary sewer improvements Sewer collection system improvements $1,881,296 $1,531,196 $350,100 $1,881,296 $0 Storm drainage improvements Storm drainage collection system improvements $1,733,872 $1,154,306 $579,566 $1,733,872 $0 Landscaping Perimeter landscape buffer improvements $1,830,501 $1,830,501 $0 $1,830,501 $0 Duct bank improvements Single duct bank $486,184 $392,534 $93,650 $486,184 $0 Double Duct Bank $247,770 $247,770 $0 $247,770 $0 Other costs $0 Public sidewalks $432,000 $432,000 $0 $432,000 $0 Retaining wall +/- 10' average ht. $1,889,730 $1,889,730 $0 $1,889,730 $0 Unclassified excavation (cut bank yards) $1,155,000 $1,155,000 $0 $1,155,000 $0 Street lights $84,000 $84,000 $0 $84,000 $0 Bollard lights $150,000 $150,000 $0 $150,000 $0 Iron ornament benches and other seating $238,500 $238,500 $0 $238,500 $0 Right-of-way $0 $0 $0 $0 $0 R.O.W Sod $9,758 $9,758 $0 $9,758 Geotech $430,000 $380,000 $50,000 $430,000 $0 Erosion control $260,000 $260,000 $0 $260,000 $0 Signs $75,000 $70,000 $5,000 $75,000 $0 Large capacity well $0 $0 $0 $0 $0 Engineering, surveying, construction management $1,882,831 $1,764,470 $118,361 $1,882,831 $0 Bonds $181,335 $146,859 $34,476 $181,335 $0 Inspection fees $922,078 $813,030 $109,048 $922,078 $0 Contingency & public parking $984,523 $802,276 $182,247 $984,523 $0 Subtotal: Other costs $8,694,755 $8,195,623 $499,132 $8,694,755 $0 Parking facility improvements $6,160,000 $0 $0 $0 $6,160,000 Total improvement costs $26,485,998 $18,009,400 $2,316,598 $20,325,998 $6,160,000 Estimated Bond issuance costs Capitalized Interest $4,072,500 $3,664,500 $238,000 $3,902,500 $170,000 Debt Service Reserve Fund $2,808,100 $2,225,600 $340,000 $2,565,600 $242,500 Other bond issue costs $3,023,402 $2,275,500 $505,402 $2,780,902 $242,500 Subtotal: Estimated Bond issuance costs $9,904,002 $8,165,600 $1,083,402 $9,249,002 $655,000 Grand Total Authorized Improvement Costs $36,390,000 $26,175,000 $3,400,000 $29,575,000 $6,815,000 Less: Developer funded costs ($4,390,000) $0 $0 $0 ($4,390,000) Total Authorized Improvements Funded $32,000,000 $26,175,000 $3,400,000 $29,575,0001 $2,425,000 Notes: See attached engineering estimates for detailed line item budgets. The parking facilities improvement costs are estimated by the developer at $14,000 per parking space for approximately 440 parking spaces. Draft B-1 Res 14-45 Exhibit Entrada - PID Budget Summary Current Area 1, 2, & Common to All PID Common to All $ 5,439,422 Improvement Area #1 $ 9,089,967 Improvement Area #2 $ 2,677,735 Improvement Area #3 (Future) $ 2,134,351 Current Area 1, 2, & Common to All PID Water $ 890,040 Sewer $ 1,531,196 Storm $ 1,154,306 Paving, Signs, Lights $ 4,353,430 Unclassified Excavation / Wall / Erosion $ 3,304,730 R.O.W. Sod $ 9,758 Duct Bank $ 640,304 Landscaping $ 2,219,001 Engineering, Surv, CA, & Geotech $ 2,144,470 Contingency & Public Parking $ 802,276 Bonds & Inspection Fees $ 959,890 Total $ 18,009,400 Future Area #3 PID Water $ 171,680 Sewer $ 350,100 Storm $ 579,566 Paving $ 627,470 Duct Bank $ 93,650 10% Contingency & Escalation $ 182,247 Remaining Surv, CA, & Geotech $ 168,361 Bonds & Inspection Fees $ 143,524 Total $ 2,316,598 Res 14-45 Exhibit ENTRADA COMMON TO ALL PID Water $ 406,585 Sewer $ 910,910 Storm $ 861,975 Paving & 1 -Traffic Signal Intersection $ 1,603,070 Unclassified Excavation (Cut Bank Yards) $ 350,000 Double Duct Bank $ 247,770 Geotech $ 60,000 Erosion Control $ 40,000 Signs $ 5,000 Engineering, Surveying, Construction Management $ 613,243 Bonds $ 75,651 Inspection Fees $ 265,219 TOTAL $ 5,439,422 Res 14-45 Exhibit Item Unit No. ENTRADA COMMON TO ALL WATER LINE IMPR 0VEMENTS Description Qty Unit Price Total 1 LS Furnish and install connection to the Existing 12 -inch waterlines, 5 $ 1,500.00 $ 7,500.00 complete and in place, per lump sum 2 LF Furnish and install 12 -inch PVC waterline, includes valves, taps and 10840 $ 30.00 $ 325,200.00 fittings, complete and in place, per linear foot 3 LF Furnish and install 8 -inch PVC waterline, includes valves, taps and 495 $ 23.00 $ 11,385.00 fittini4s,complete and in place, per linear foot 4 EA Furnish and install Standard Fire Hydrant Assembly Inc. 6 -inch 90 11 $ 3,500.00 $ 38,500.00 Deg. Bend complete and in place, per each 5 EA Furnish and install single service water line, complete and in place, 10 $ 800.00 $ 8,000.00 6 EA per each 8 750.00 $ 6,000.00 6 EA Furnish and install 12" blow -off valves, complete and in place, per 7 $ 8,000.00 1 $ 16,000.00 each Item Unit Total Water Line Improvements: $406,585.00 SANITARY SEWER LINE IMPROVEMENTS Description No. Qty Unit Price Total 1 EA Furnish and install lift station and wet well, complete and in place, 1 $ 287,000.00 $ 287,000.00 per each 2 EA Furnish and install TRA meter station and injection connection to the 1 $ 362,000.00 $ 362,000.00 existing sanitary sewer force main, complete and in place, per each 3 LF Furnish and install 4 -inch force main sanitary sewer line, complete 1300 $ 20.00 J $ 26,000.00 and in lace per linear foot 4 LF Furnish and install 8 -inch SDR 35 PVC sanitary sewer line, complete 4485 S 25.00 $ 112,125.00 and in place, per linear foot 5 EA Furnish and install Manhole, complete and in place, per each 32 $ 3,500.00 $ 112,000.00 6 EA Furnish and install single service sanitary sewer lateral, complete and 8 750.00 $ 6,000.00 in place, per each Furnish and install Sanitary Sewer Line Trench Safety System in 7 LF accordance with current OSHA standards, complete and in place, per 5785 $ 1.00 $ 5,785.00 linear foot Total Sanitary Sewer Line Improvements: $910,910.00 Res 14-45 Exhibit Item Unit No. STORM SEWER IMPROVEMENTS Description Qty Unit Price Total 1 LF Furnish and install various sizes of RCP storm pipe, complete and in 3540 50.00 $ 177,000.00 laceper each 2 EA Furnish and install Junction Box, complete in place, per each 15 S 2,500.00 $ 37,500.00 3 EA Furnish and install curb inlet complete and in place, per each 19 $ 3,000.00 $ 57,000.00 3 SY Furnish and install Storm Sewer Line Trench Safety System in 27535 $ 2.00 $ 55,070.00 4 LF accordance with current OSHA standards, complete and in place, per 2425 S 1.00 $ 2,425.00 4 SY linear foot 13800 $ 2.25 $ 31,050.00 - LF Furnish and install retaining wall around perimeter of Lake, complete 6190 95.00 $ 588,050.00 5 TON and in place, per each 460 $ 130.00 $ 59,800.00 Item Unit No. Storm Sewer Improvements Total: $861,975.00 PAVING AND STRIPING IMPROVEMENTS Description Qty Unit Price Total I SY Furnish and install 8 -inch 4200 PSI Concrete with #3 bars 18 -inch on 12900 $ 36.00 $ 464,400.00 center each way, complete and in place, per square yard 2 SY Furnish and install 6 -inch 3600 PSI Concrete with #3 bars 18 -inch on 26225 $ 30.00 $ 786,750.00 center each way, complete and in place, per square yard 3 SY Furnish and install 8 -inch Stabilized Subgrade, complete and in 27535 $ 2.00 $ 55,070.00 lace per square yard 4 SY Furnish and install 10 -inch Stabilized Subgrade, complete and in 13800 $ 2.25 $ 31,050.00 laceper square yard 5 TON Furnish and install Lime, complete and in place, per ton 460 $ 130.00 $ 59,800.00 6 LS Furnish Traffic Contol 1 $ 20,000.00 $ 20,000.00 7 EA Traffic Signal at Davis and Solana Blvd 1 $ 176,000.00 $ 176,000.00 8 LS Furnish and install misc pavement striping, complete and in place, 1 $ 10,000.00 $ 10,000.00 per lump sum Paving and Striping Improvements Total Total Wet Utilities, & Paving $1,603,070.00 $3,782,540.00 Res 14-45 Exhibit MISC. Item No. Unit Description Qty Unit Price Total 1 CY Unclassified excavation (cut bank yards) 100000 $ 3.50 $ 350,000.00 2 LF Double Duct Bank 4955 $ 50.00 $ 247,769.50 3 LS Geotech 1 $ 60,000.00 $ 60,000.00 4 LS Erosion Control 1 $ 40,000.00 $ 40,000.00 5 LS Signs 1 $ 5,000.00 $ 5,000.00 6 LS Engineering, Surveying, Construction Management 1 $ 613,243.33 $ 613,243.33 7 LS Bonds @ 2% 1 $ 75,650.80 $ 75,650.80 8 1 LS Inspection Fees @ 6% 1 $ 265,218.57 $ 265,218.57 Miscellaneous Improvements Total: $1,656,882.20 Res 14-45 Exhibit ENTRADA IMPROVEMENT AREA #1 PID Water $ 207,750 Sewer $ 242,916 Storm $ 177,300 Paving $ 1,750,100 Perimeter Landscaping Buffer Improvements $ 1,830,501 Public Sidewalks 4" 3600 PSI Reinforced w/ #3 Bars $ 432,000 Retaining Wall +/- 5' Average Height $ 125,550 Retaining Wall +/- 10' Average Height $ 1,090,980 Unclassified Excavation (Cut Bank Yards) $ 805,000 R.O.W. Sod $ 3,212 Street lights $ 84,000 Bollard lights $ 150,000 Iron Ornamental Benches and Other Seating $ 238,500 Single Duct Bank $ 201,609 Geotech $ 160,000 Erosion Control $ 120,000 Signs $ 45,000 Engineering, Surveying, Construction Management $ 958,966 Bonds $ 47,561 Inspection Fees $ 419,022 TOTAL S 9.089.967 Res 14-45 Exhibit ENTRADA IMPROVEMENT AREA #1 WATER LINE IMPROVEMENTS Item Unit Description Qty No. Unit Price Total 1 LF Furnish and install 8 -inch PVC waterline, includes valves, taps and 4250 $ 23.00 $ 97,750.00 fittin s com Tete and in place, per linear foot 2 EA Furnish and install Standard Fire Hydrant Assembly Inc. 6 -inch 90 20 $ 3,500.00 $ 70,000.00 3 EA Deg. Bend complete and in place, per each 50 S 750.00 $ 37,500.00 3 EA Furnish and install single service water line, complete and in place, 50 $ 800.00 $ 40,000.00 4 LF per each 2300 S 1.00 $ 2,300.00 Item Unit No. Total Water Line Improvements: $207,750.00 SANITAR Y SEWER LINE IMPR OVEMENTS Description Qty Unit Price Total 1 LF Furnish and install 8 -inch SDR 35 PVC sanitary sewer line, complete 3300 $ 25.00 $ 82,500.00 and in place, per linear foot 2 EA Furnish and install Manhole, complete and in place, per each 33 S 3,500.00 $ 115,500.00 3 EA Furnish and install single service sanitary sewer lateral, complete and 50 S 750.00 $ 37,500.00 in lace per each 4 LF Furnish and install Sanitary Sewer Line Trench Safety System in 2300 S 1.00 $ 2,300.00 4 LF accordance with current OSHA standards, complete and in place, per 7416 S 1.00 $ 7,416.00 linear foot Item Unit No. Total Sanitary Sewer Line Improvements: STORM SEWER IMPROVEMENTS Description $242,916.00 Qty Unit Price Total 1 LF Furnish and install various sizes of RCP storm pipe, complete and in 2300 $ 50.00 $ 115,000.00 laceper each 2 EA Furnish and install Junction Box, complete in place, per each 6 $ 2,500.00 $ 15,000.00 3 EA Furnish and install curb inlet complete and in place, per each 15 $ 3,000.00 $ 45,000.00 Furnish and install Storm Sewer Line Trench Safety System in 4 LF accordance with current OSHA standards, complete and in place, per 2300 S 1.00 $ 2,300.00 linear foot Storm Sewer Improvements Total: $177,300.00 Res 14-45 Exhibit Item Unit No. PA VING AND STRIPING IMPROVEMENTS Description Qty Unit Price Total 1 SY Furnish and install 6 -inch 3600 PSI Concrete with 93 bars 18 -inch on 13940 $ 30.00 $ 418,200.00 2 LS center each way, complete and in place, per square yard 1 $ 146,731.00 $ 146,731.00 2 SY Furnish and install 8 -inch Stabilized Subgrade, complete and in 14900 $ 2.00 $ 29,800.00 4 LS lace er square yard 1 $ 128,700.00 $ 128,700.00 3 TON Furnish and install Lime, complete and in place, per ton 170 $ 130.00 $ 22,100.00 4 EA Plaza Bridge 1 $ 840,000.00 $ 840,000.00 5 EA Mercado Ricardo Pedestrian Bridge 1 $ 425,000.00 $ 425,000.00 6 LS Furnish Traffic Contol 1 $ 5,000.00 $ 5,000.00 7 LS Furnish and install mist pavement striping, complete and in place, 1 $ 10,000.00 $ 10,000.00 10 LS per lump sum 1 $ 78,533.00 $ 78,533.00 Item Unit No. Paving and Striping Improvements Total: $1,750,100.00 Total Wet Utilities, & Paving: $2,378,066.00 PERIMETER LANDSCAPE BUFFER IMPROVEMENTS Description Qty Unit Price Total 1 LS Irrigation along Davis Blvd. and Solana Blvd. 1 $ 98,709.00 $ 98,709.00 2 LS Vineyards / Plantings along Davis Blvd. and Solana Blvd. 1 $ 146,731.00 $ 146,731.00 3 LS Trees along Davis Blvd. and Solana Blvd. 1 $ 330,003.00 $ 330,003.00 4 LS Rubble Walls along Davis Blvd. and Solana Blvd. 1 $ 128,700.00 $ 128,700.00 5 LS Walks along Davis Blvd. and Solana Blvd. 1 $ 110,880.00 $ 110,880.00 6 LS Rest Areas along Davis Blvd. and Solana Blvd. 1 $ 176,977.00 $ 176,977.00 7 LS Irrigation along 114 Frontage 1 $ 117,800.00 $ 117,800.00 8 LS Vineyards/ Plantings along 114 Frontage 1 $ 274,866.00 $ 274,866.00 9 LS Trees along 114 Frontage 1 $ 47,120.00 $ 47,120.00 10 LS Rubble Walls along 114 Frontage 1 $ 78,533.00 $ 78,533.00 11 LS Rest Areas along 114 Frontage 1 $ 39,182.00 $ 39,182.00 12 LS Four small wells (25 gmp each) 4 $ 62,000.00 $ 248,000.00 13 1 LS ILake bubblers (3) for aeriation 3 $ 11,000.00 1 $ 33,000.00 Perimeter Landscape Buffer Improvements Total: $1,830,501.00 Res 14-45 Exhibit MISC. Item No. Unit Description Qty Unit Price Total 1 SY Public Sidewalks 4" 3600 PSI reinforced w/ #3 bars 12000 $ 36.00 $ 432,000.00 2 LF Retaining wall +/- 5' average ht. 1674 $ 75.00 $ 125,550.00 3 LF Retaining wall +/- 10' average ht. 5510 $ 198.00 $ 1,090,980.00 4 CY Unclassified excavation (cut bank yards) 230000 $ 3.50 $ 805,000.00 5 SF R.O.W. Sod 10705 $ 0.30 $ 3,211.50 6 EA Street lights 21 $ 4,000.00 $ 84,000.00 7 EA Bollard lights 60 $ 2,500.00 $ 150,000.00 8 EA Iron ornamental benches and other seating 45 $ 5,300.00 $ 238,500.00 9 LF Single Duct Bank 5760 $ 35.00 $ 201,609.45 10 LS Geotech 1 $ 160,000.00 $ 160,000.00 11 LS Erosion Control 1 $ 120,000.00 $ 120,000.00 12 LS Signs 1 $ 45,000.00 $ 45,000.00 13 LS Engineering, Surveying, Construction Management 1 $ 958,965.70 $ 958,965.70 14 LS Bonds @ 2% 1 $ 47,561.32 $ 47,561.32 15 LS Inspection Fees @ 6% 1 $ 419,022.39 $ 419,022.39 Miscellaneous Improvements Total: $4,881,400.36 Res 14-45 Exhibit ENTRADA IMPROVEMENT AREA #2 PID Water $ 275,705 Sewer $ 377,370 Storm $ 115,031 Paving $ 414,260 Retaining Wall +/- 10' Average Height $ 673,200 R.O.W. Sod $ 6,546 Single Duct Bank $ 190,925 Geotech $ 160,000 Erosion Control $ 100,000 Signs $ 20,000 Engineering, Surveying, Construction Management $ 192,261 Bonds $ 23,647 Inspection Fees $ 128,789 TOTAL S 2.677.735 Res 14-45 Exhibit ENTRADA IMPROVEMENT AREA #2 WA TER LINE IMPR O VEMENTS Item Unit Description Qty No. Unit Price Total 1 LF Furnish and install 8 -inch PVC waterline, includes valves, taps and 513 5 $ 23.00 $ 118,105.00 fittin s com Tete and in place, per linear foot 2 EA Furnish and install Standard Fire Hydrant Assembly Inc. 6 -inch 90 16 3,500.00 $ 56,000.00 3 EA Deg. Bend complete and in place, per each 127 $ 750.00 $ 95,250.00 3 EA Furnish and install single service water line, complete and in place, 127 S 800.00 $ 101,600.00 4 LF per each 1481 $ 1.00 $ 1,481.00 Item Unit No. Total Water Line Improvements: $275,705.00 SANITAR Y SEWER LINE IMPR 0VEMENTS Description Qty Unit Price Total 1 LF Furnish and install 8 -inch SDR 35 PVC sanitary sewer line, complete 4120 $ 25.00 $ 103,000.00 and in place, per linear foot 2 EA Furnish and install Manhole, complete and in place, per each 50 $ 3,500.00 $ 175,000.00 3 EA Furnish and install single service sanitary sewer lateral, complete and 127 $ 750.00 $ 95,250.00 in lace per each 4 LF Furnish and install Sanitary Sewer Line Trench Safety System in 1481 $ 1.00 $ 1,481.00 4 LF accordance with current OSHA standards, complete and in place, per 4120 $ 1.00 $ 4,120.00 linear foot Item Unit No. Total Sanitary Sewer Line Improvements: STORM SEWER IMPROVEMENTS Description $377,370.00 Qty Unit Price Total 1 LF Furnish and install various sizes of RCP storm pipe, complete and in 1481 $ 50.00 $ 74,050.00 laceper each 2 EA Furnish and install Junction Box, complete in place, per each 5 $ 2,500.00 $ 12,500.00 3 EA Furnish and install curb inlet complete and in place, per each 9 $ 3,000.00 $ 27,000.00 Furnish and install Storm Sewer Line Trench Safety System in 4 LF accordance with current OSHA standards, complete and in place, per 1481 $ 1.00 $ 1,481.00 linear foot Storm Sewer Improvements Total: $115,031.00 Res 14-45 Exhibit Item Unit No. PA VING AND STRIPING IMPROVEMENTS Description Qty Unit Price Total I SY Furnish and install 6 -inch 3600 PSI Concrete with 93 bars 18 -inch on 11655 $ 30.00 $ 349,650.00 center each way, complete and in place, per square yard 2 SY Furnish and install 8 -inch Stabilized Subgrade, complete and in 12455 $ 2.00 $ 24,910.00 lace er square yard 3 TON Furnish and install Lime, complete and in place, per ton 190 $ 130.00 $ 24,700.00 6 LS Furnish Traffic Contol 1 $ 5,000.00 $ 5,000.00 7 LS Furnish and install mise pavement striping, complete and in place, 1 $ 10,000.00 $ 10,000.00 per lump sum Paving and Striping Improvements Total: Total Wet Utilities, & Paving: $414,260.00 $1,182,366.00 Res 14-45 Exhibit Item Unit No. Description Qty Unit Price Total 1 LF Retaining wall +/- 10' average ht. 3400 $ 198.00 $ 673,200.00 2 SF R.O.W. Sod 21820 $ 0.30 $ 6,546.00 3 LF Single Duct Bank 5455 $ 35.00 $ 190,925.00 4 LS Geotech 1 $ 160,000.00 $ 160,000.00 5 LS Erosion Control 1 $ 100,000.00 $ 100,000.00 6 LS Signs 1 $ 20,000.00 $ 20,000.00 7 LS Engineering, Surveying, Construction Management 1 $ 192,260.74 $ 192,260.74 8 LS Bonds @ 2% 1 $ 23,647.32 $ 23,647.32 9 LS linspection Fees @ 6% 1 $ 128,789.46 $ 128,789.46 Miscellaneous Improvements Total: $19495,368.52 Res 14-45 Exhibit ENTRADA IMPROVEMENT AREA #3 PID Water $ 171,680 Sewer $ 350,100 Storm $ 579,566 Paving & 2 -Offsite Traffic Light Intersections $ 622,470 Single Duct Bank $ 93,650 Geotech $ 50,000 Signs $ 5,000 Engineering, Surveying, Construction Management $ 118,361 Bonds $ 34,476 Inspection Fees $ 109,048 TOTAL $ 2,134,351 Res 14-45 Exhibit ENTRADA IMPROVEMENT AREA 3 WATER LINE IMPROVEMENTS Item Unit Description Qty No. Unit Price Total 1 LF Furnish and install 8 -inch PVC waterline, includes valves, taps and 3160 $ 23.00 $ 72,680.00 fittin s com Tete and in place, per linear foot 7 EA Furnish and install Standard Fire Hydrant Assembly Inc. 6 -inch 90 10 $ 3,500.00 $ 35,000.00 De . Bend complete and in place, per each 3 EA Furnish and install single service water line, complete and in place, 80 $ 800.00 $ 64,000.00 per each Item Unit No. Total Water Line Improvements: $171,680.00 SANITARY SEWER LINE IMPROVEMENTS Description Qty Unit Price Total I EA Furnish and install lift station and wet well, complete and in place, 1 $ 12500.00 $ 125,000.00 per each i LF Furnish and install 4 -inch force main sanitary sewer line, complete 1550 $ 20.00 $ 31,000.00 and in place, per linear foot 3 LF Furnish and install 8 -inch SDR 35 PVC sanitary sewer line, complete 2675 $ 25.00 $ 66,875.00 and in lace per linear foot 4 EA Furnish and install Manhole, complete and in place, per each 18 $ 3,500.00 $ 63,000.00 EA Furnish and install single service sanitary sewer lateral, complete and 80 $ 750.00 $ 60,000.00 in lace per each Furnish and install Sanitary Sewer Line Trench Safety System in fi LF accordance with current OSHA standards, complete and in place, per 4225 $ 1.00 $ 4,225.00 linear foot Total Sanitary Sewer Line Improvements: $350,100 Res 14-45 Exhibit Item Unit No. STORM SEWER IMPROVEMENTS Description Qty Unit Price Total 1 LF Furnish and install various sizes of RCP storm pipe, complete and in 741 $ 50.00 $ 37,050.00 lace per each 2 EA Furnish and install Junction Box, complete in place, per each 1 $ 2,500.00 $ 2,500.00 3 EA Furnish and install curb inlet complete and in place, per each 12 $ 3,000.00 $ 36,000.00 3 TON Furnish and install Storm Sewer Line Trench Safety System in 115 $ 130.00 $ 14,950.00 4 LF accordance with current OSHA standards, complete and in place, per 741 $ 1.00 $ 741.00 linear foot 5 LS Culvert Crossing & Waterfall 1 $ 100,000.00 $ 100,000.00 6 LF Furnish and install retaining wall around perimeter of Lake, complete 4,245 $ 95.00 $ 403,275.00 and in place, per each 7 LS two small wells (25 gmp each) 2 $ 62,000.00 $ 124,000.00 rt---j-:LS­ Lake bubblers (2) for aeriation 2 $ 11,000.00 $ 22,000.00 Item Unit No. Storm Sewer Improvements Total: PA VING AND STRIPING IMPROVEMENTS Description 579 Qty Unit Price Total 1 SY Furnish and install 6 -inch 3600 PSI Concrete with #3 bars 18 -inch on 7,950 $ 30.00 $ 238,500.00 center each way, complete and in place, per square yard 2 SYFurnish and install 8 -inch Stabilized Subgrade, complete and in 8,510 $ 2.00 $ 17,020.00 lace per square yard 3 TON Furnish and install Lime, complete and in place, per ton 115 $ 130.00 $ 14,950.00 4 EA Traffic Signal at Solana Blvd & at 114 pending warrant 2 $ 176,000.00 $ 352,000.00 Paving and Striping Improvements Total: 6229470 Total Wet Utilities & Paving 1,723,816 Res 14-45 Exhibit MISC. Item No. Unit Description Qty Unit Price Total 1 LF Single Duct Bank 2676 $ 35.00 $ 93,650.20 2 LS Geotech 1 $ 50,000.00 $ 50,000.00 3 LS Signs 1 $ 5,000.00 $ 5,000.00 4 LS Engineering, Surveying, Construction Management 1 $ 118,361.00 $ 118,361.00 5 LS Bonds @ 2% 1 $ 34,476.32 $ 34,476.32 6 LS Inspection Fees '@ 6% 1 $ 109,047.97 $ 109,047.97 Miscellaneous Improvements Total: $410,535 Res 14-45 Exhibit Draft Appendix C DIAGRAM OF THE AUTHORIZED IMPROVEMENTS Res 14-45 Exhibit �I EXHIBIT A AREA #1 PAVEMENT IMPROVEMENTS ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG CWMEVG SIE RM PLATTING CONSULTANTS, LLC LAWSURVE jlrjG LANDSCAPE CTUM TBPE Finn No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Finn 610 Byron Nelson Blvd, Stas 114 • Roanoke, TX 76262 • R 692.831.9712 • F: 817.894A443 No. 14447700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 -�i EXHIBIT A AREA #1 WATER IMPROVEMENTS ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG CWMEVG SIE RM PLATTINGCONSULTANTS, LLC LAWSURVE j1rlG LANDSCAPE CTUM TBPE Finn No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Firm 610 Byron Nelson Blvd, Stec 114 • Roanoke, TX 76262 • Ft 692.831.9712 • F: $17.MA443 No. 14047700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 EXHIBIT A AREA #1 SEWER IMPROVEMENTS ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG CWMEVG SIE RM PLATTING CONSULTANTS, LLC LAWSURVE jlrjG LANDSCAPE CTUM TBPE Finn No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Firm 610 Byron Nelson Blvd, Stec 114 • Roanoke, TX 76262 • R 692.831.9712 • F: 817.894A043 No. 14447700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 EXHIBIT A AREA #1 STORM IMPROVEMENTS ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG CWMENG ERM PLATTING CONSULTANTS, LLC LAWSURVE jlrjG LANDSCAPE CTUM TBPE Finn No. 1798 111 HBelde Drive • LewlsNlle, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Finn 610 Byron Nelson Blvd, Sts 114 • Roanoke, TX 76262 • R 692.831.9712 • F: 817AWA443 No. 14447700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 -�I EXHIBIT A AREA #1 DUCT BANK ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG MENG SIE RM PLATTINGCONSULTANTS, LLC LAWSURVE j1rlG LANDSCAPE CTUM TBPE Finn Q No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Firm 610 Byron Nelson Blvd, Stec 114 • Roanoke, TX 76262 • Ft 692.831.9712 • F: $17.MA043 No. 14047700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 Q -�I EXHIBIT A AREA #2 PAVEMENT IMPROVEMENTS ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG CWMENGIId�RII!G PLATTINGCONSULTANTS, LLC LAWSURVE j1vlG LANDSCAPE CTUM TBPE Finn No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Finn 610 Byron Nelson Blvd, Stec 114 • Roanoke, TX 76262 • Ft 692.831.9712 • F: $17.MA443 No. 14047700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 -�i EXHIBIT A AREA #2 WATER IMPROVEMENTS ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG CWMENGIId�RII!G PLATTINGCONSULTANTS, LLC LAWSURVE 1vlG LANDSCAPE CTUM TBPE Finn No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Firm 610 Byron Nelson Blvd, Stec 114 • Roanoke, TX 76262 • Ft 692.831.9712 • F: $17.MA043 No. 14047700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 EXHIBIT A AREA #2 SEWER IMPROVEMENTS ENTRADA PHASE II TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSOSMPLANNNG CWMENGIId�RII!G PLATTINGCONSULTANTS, LLC LAWSURVE j1vlG LANDSCAPE CTUM TBPE Finn No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Firm 610 Byron Nelson Blvd, Stec 114 • Roanoke, TX 76262 • Ft 692.831.9712 • F: $17.MA443 No. 14047700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 6�G �-A -�i EXHIBIT A AREA #2 STORM IMPROVEMENTS ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG CWMENG ERM PLATTING CONSULTANTS, LLC LAWSURVE jlrjG LANDSCAPE CTUM TBPE Finn No. 1798 111 HBelde Drive • LewlsNlle, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Finn 610 Byron Nelson Blvd, Sts 114 • Roanoke, TX 76262 • R 692.831.9712 • F: 817AWA443 No. 14447700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 cm— \I O ED -�I EXHIBIT A AREA #2 DUCT BANK ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG MENG SIE RM PLATTINGCONSULTANTS, LLC LAWSURVE j1rlG LANDSCAPE CTUM TBPE Finn Q No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Firm 610 Byron Nelson Blvd, Stec 114 • Roanoke, TX 76262 • Ft 692.831.9712 • F: $17.MA043 No. 14047700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 EXHIBIT A AREA #3 PAVEMENT IMPROVEMENTS ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG CWMEVG SIE RM PLATTING CONSULTANTS, LLC LAWSURVE jlrjG LANDSCAPE CTUM TBPE Finn No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Firm 610 Byron Nelson Blvd, Stec 114 • Roanoke, TX 76262 • R 692.831.9712 • F: 817.894A043 No. 14447700 DRAWN BY:JCM DATE: 04/15/2014 SCALE:1"=500' JOB. NO. 12139 EXHIBIT A AREA #3 WATER IMPROVEMENTS ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG CWMEVG SIE RM PLATTING CONSULTANTS, LLC LAWSURVE jlrjG LANDSCAPE CTUM TBPE Finn No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Firm 610 Byron Nelson Blvd, Stec 114 • Roanoke, TX 76262 • R 692.831.9712 • F: 817.894A043 No. 14447700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 EXHIBIT A AREA #3 SEWER IMPROVEMENTS ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG CWMEVG SIE RM PLATTING CONSULTANTS, LLC LAWSURVE jlrjG LANDSCAPE ('TUM TBPE Finn No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Firm 610 Byron Nelson Blvd, Stas 114 • Roanoke, TX 76262 • R 692.831.9712 • F: 817.894A443 No. 14447700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 EXHIBIT A AREA #3 STORM IMPROVEMENTS ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG CWMEVG SIE RM PLATTING CONSULTANTS, LLC LAWSURVE jlrjG LANDSCAPE CTUM TBPE Finn No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Firm 610 Byron Nelson Blvd, Stec 114 • Roanoke, TX 76262 • R 692.831.9712 • F: 817.894A043 No. 14447700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 EXHIBIT A AREA #3 DUCT BANK ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS qSO SMPLANNNG MENG SIE RM PLATTINGCONSULTANTS, LLC LAWSURVE jlrjG LANDSCAPE CTUM TBPE Finn Q No. 1798 111 Hillside Drive • Lewisville, TX 75457 • P: 972A36.9712 • F: 972A36.9715 TBPLS Firm 610 Byron Nelson Blvd, Stec 114 • Roanoke, TX 76262 • Ft 692.831.9712 • F: 817.894A043 No. 14447700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 DrgfZ Appendix D LAND USE CLASSS, EQUIVALENT UNITS AND ALLOCATION OF ASSESSMENTS Res 14-45 Exhibit Appendix D Land Use Classes, Equivalent Units and Allocation of Assessments For purposes of allocating the Assessments, the Assessed Property in each Improvement Area has been classified in one of thirteen Land Use Classes. The following table shows the proposed residential and non-residential development planned within the PID. Table D-1 Proposed Development within the PID — All Improvement Areas Land Use Class Description Proposed Development R esiden tial Land Use Class 10 Commercial - Retail 372,099 Land Use Class 1 Condo Units (more than 3,600 sq. ft) 38 Units Land Use Class 2 Condo Units (2,500 to 3,600sq. ft) 71 Units Land Use Class 3 Condo Units (1,800 to 2,500 sq. ft) 6 Units Land Use Class 4 Villa - West (more than 3,600 sq. ft) 42 Units Land Use Class 5 Villa - West (2,500 to 3,600sq. ft) 16 Units Land Use Class 6 Villa - West (1,800 to 2,500 sq. ft) 69 Units Land Use Class 7 Villa - East (more than 3,600 sq. ft) 21 Units Land Use Class 8 Villa - East (2,500 to 3,600sq. ft) 23 Units Land Use Class 9 Villa - East (1,800 to 2,500 sq. ft) 36 Units Total - Residential 322 Units Non -Residential Land Use Class 10 Commercial - Retail 372,099 Sq. Ft Land Use Class 11 Commercial - Office 266,100 Sq. Ft Land Use Class 12 Commercial - Hospitality 255,500 Sq. Ft Land Use Class 13 Commercial - Institutional 264,600 Sq. Ft Total — Non-residential 1,158,299_5_q. Ft The following table shows the proposed residential and non-residential Land Use Classes within Improvement Area #1 of the PID. D - 1 v6.2 Res 14-45 Exhibit Table D-2 Proposed Development within the PID — Improvement Area #1 (Mixed -Use Core) Land Use Class Description Proposed Development Residential Land Use Class 10 Commercial - Retail 372,099 Land Use Class 1 Condo Units (more than 3,600 sq. ft) 38 Units Land Use Class 2 Condo Units (2,500 to 3,600sq. ft) 71 Units Land Use Class 3 Condo Units (1,800 to 2,500 sq. ft) 6 Units Sq. Ft Total - Residential 115 Units Non -Residential Description Proposed Development R esiden tial Land Use Class 10 Commercial - Retail 372,099 Sq. Ft Land Use Class 11 Commercial - Office 266,100 Sq. Ft Land Use Class 12 Commercial - Hospitality 255,500 Sq. Ft Land Use Class 13 Commercial - Institutional 264,600 Sq. Ft Total - Residential Total—Non-residential 19158,299 Sq. Ft The following table shows the proposed residential Land Use Classes within Improvement Area #2 of the PID. Table D-3 Proposed Development within the PID — Improvement Area #2 (West Residential) Land Use Class Description Proposed Development R esiden tial Land Use Class 4 Villa - West (more than 3,600 sq. ft) 42 Units Land Use Class 5 Villa - West (2,500 to 3,600sq. ft) 16 Units Land Use Class 6 Villa - West (1,800 to 2,500 sq. ft) 69 Units Total - Residential 127 Units The following table shows the proposed residential Land Use Classes within Improvement Area #3 of the PID. D-2 v6.2 Res 14-45 Exhibit Table D-4 Proposed Development within the PID — Improvement Area #3 (East Residential) Land Use Class Description Proposed Development Residential Land Use Class 7 Villa - East (more than 3,600 sq. ft) 21 Units Land Use Class 8 Villa - East (2,500 to 3,600sq. ft) 23 Units Land Use Class 9 Villa - East (1,800 to 2,500 sq. ft) 36 Units Total - Residential 80 Units The Land Use Classes shown in the above tables are defined as follows: "Land Use Class 1" means lots identified as such on the Assessment Roll, which are referred to as condominium residential units in the Zoning Ordinance and being generally lots for a condominium dwelling unit placed over retail and office uses, having more than 3,600 square feet area with structured parking provided. "Land Use Class 2" means lots identified as such on the Assessment Roll, which are referred to as condominium residential units in the Zoning Ordinance and being generally lots for a condominium dwelling unit placed over retail and office uses, having between 2,500 and 3,600 square feet area with structured parking provided. "Land Use Class 3" means lots identified as such on the Assessment Roll, which are referred to as condominium residential units in the Zoning Ordinance and being generally lots for a condominium dwelling unit placed over retail and office uses, having 1,800 to 2,500 square feet area with structured parking provided. "Land Use Class 4" means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having more than 3,600 square feet area and located in the development commonly referred to as West Residential. "Land Use Class 5" means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having between 2,500 and 3,600 square feet area and located in the development commonly referred to as West Residential. "Land Use Class 6" means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having 1,800 to 2,500 square feet area and located in the development commonly referred to as West Residential. "Land Use Class 7" means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single D-3 v6.2 Res 14-45 Exhibit family residential units, having more than 3,600 square feet area and located in the development commonly referred to as East Residential. "Land Use Class 8" means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having between 2,500 and 3,600 square feet area and located in the development commonly referred to as East Residential. "Land Use Class 9" means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having 1,800 to 2,500 square feet area and located in the development commonly referred to as East Residential. "Land Use Class 10" means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally parcels used for retail purposes that may be comprised of a single tenant or multiple tenants that make up a retail establishment and are generally located on the ground floor of buildings or in a single building. "Land Use Class 11" means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally parcels used for office purposes that may include a group of offices or a single office and are generally located in a single building, on one or more floors, or multiple buildings. "Land Use Class 12" means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally a building or group of buildings designed and occupied for hospitality uses. "Land Use Class 13" means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally parcels used institutional purposes such as assisted living, nursing and other similar residential uses that are either on the water or on the central plaza. As explained under Section V, for purpose of this Service and Assessment Plan, the Town Council has determined that the Actual Costs of the Authorized Improvements to be financed with the Bonds shall be allocated to the Assessed Property by spreading the entire Assessment across the Parcels based on the estimated Equivalent Units. For purposes of this Service and Assessment Plan, the Town Council has determined that the Authorized Improvement Costs shall be allocated to the Assessed Property in each Improvement Area spreading the entire Assessment across the Parcels of Assessed Property in each Improvement Area on the basis of the Direct Improvement Costs and Common Improvement Costs excluding estimated right-of—way costs, as allocated to each Improvement Area based on the ratio of the Direct Improvement Costs of each Improvement Area, and that such method of allocation will result in the imposition of equal shares of the Authorized Improvement Costs to Parcels similarly benefited. Table D-5 below shows the allocation of the Common Improvement D-4 v6.2 Res 14-45 Exhibit Costs to each Improvement Area and the resulting ratio for allocating Assessment Part A to each Improvement Area. Table D-5 Allocation of Common Improvement Costs and Calculation of Assessment Part A Allocation Ratio For purposes of this Service and Assessment Plan, the Town Council has determined that the Assessment Part A allocated to the Assessed Property in each Improvement Area based on the above calculated Assessment allocation ratio is spread to each Land Use Class on the basis of the estimated Equivalent Units as calculated for each Land Use Class in each Improvement Area. The estimated Equivalent Units will be calculated based on the relative average construction cost per unit of each Land Use Class as shown herein. The average construction cost for each Land Use Class in each Improvement Area is calculated based on the estimated average square feet of each unit of residential Land Use Class or 1,000 square feet of commercial Land Use Class, as applicable, and the estimated average construction cost per square foot of each Land Use Class. Upon subsequent divisions of any Parcel, the Assessment applicable to it will then be apportioned pro rata based on the Equivalent Units of each newly created Parcel. Equivalent Units — Improvement Area #1 Having taken into consideration the matters described above, the Town Council has determined that allocating the Assessments among Parcels based on estimated average construction cost per unit is best accomplished by creating classifications of benefited Parcels in each Improvement Area based on the "Land Use Class" defined above. These classifications representing the estimated average construction cost per unit relative to the highest estimated average construction cost per unit of Land Use Class 1 in Improvement Area #1 are set forth in Table D-6 below. The total Assessment Part A allocated to Improvement Area #1 is spread to each Land D-5 v6.2 Res 14-45 Exhibit CIC Total Assessment Improvement Estimated Allocation Allocation of Estimated Allocation Area Description Cost Ratio CIC Costs Ratio Common Improvement All Costs CIC $6,241,698 -100.0% $6,241,698 $0 Direct Improvement 1 Costs $9,089,967 64.5% $4,028,374 $13,118,342 64.5% Direct Improvement 2 Costs $2,677,735 19.0% $1,186,684 $3,864,419 19.0% Direct Improvement 3 Costs $2,316,598 16.4% $1,026,640 $3,343,238 16.4% Subtotal: Part A $20,325,998 100.0% $0 $20,325,999 100.00% 1 Parking Garage $6,160,000 $0 $6,160,000 100.00% Subtotal: Part B $6,160,000 $0 $6,160,000 Total $26,485,998 $0 $26,485,998 For purposes of this Service and Assessment Plan, the Town Council has determined that the Assessment Part A allocated to the Assessed Property in each Improvement Area based on the above calculated Assessment allocation ratio is spread to each Land Use Class on the basis of the estimated Equivalent Units as calculated for each Land Use Class in each Improvement Area. The estimated Equivalent Units will be calculated based on the relative average construction cost per unit of each Land Use Class as shown herein. The average construction cost for each Land Use Class in each Improvement Area is calculated based on the estimated average square feet of each unit of residential Land Use Class or 1,000 square feet of commercial Land Use Class, as applicable, and the estimated average construction cost per square foot of each Land Use Class. Upon subsequent divisions of any Parcel, the Assessment applicable to it will then be apportioned pro rata based on the Equivalent Units of each newly created Parcel. Equivalent Units — Improvement Area #1 Having taken into consideration the matters described above, the Town Council has determined that allocating the Assessments among Parcels based on estimated average construction cost per unit is best accomplished by creating classifications of benefited Parcels in each Improvement Area based on the "Land Use Class" defined above. These classifications representing the estimated average construction cost per unit relative to the highest estimated average construction cost per unit of Land Use Class 1 in Improvement Area #1 are set forth in Table D-6 below. The total Assessment Part A allocated to Improvement Area #1 is spread to each Land D-5 v6.2 Res 14-45 Exhibit Use type in Improvement Area #1 on the basis of the estimated average construction cost for each Land Use Class. This is accomplished by giving each Land Use Class in Improvement Area #1 an Equivalent Unit factor. Equivalent Units are the ratio of the estimated average value at build -out within each Land Use Class, setting the Equivalent Unit factor for Land Use Class 1 in Improvement Area #1 to 1.0. The Equivalent Unit factor for Land Use Class 2 is calculated to be 0.62 ($468,350 - $756,210 = 0.62). The Equivalent Unit factor for each of the remaining Land Use Classes in Improvement Area #1 is calculated accordingly and shown in Table D-6. Table D-6 Estimated Equivalent Units — Improvement Area #1 Land Use Class 2 Estimated Estimated Estimated Average Average Average Construction Construction Square Feet Cost per Cost per Equivalent Unit Land Use Class per Unit Square Foot Unit Factor Land Use Class 1 3,601 $210 $756,210 1.00 per dwelling unit Land Use Class 2 2,755 $170 $468,350 0.62 per dwelling unit Land Use Class 3 1,800 $250 $450,000 0.60 per dwelling unit Land Use Class 10 1,000 $165 $165,000 0.22 per 1,000 sq. ft Land Use Class 11 1,000 $150 $150,000 0.20 per 1,000 sq. ft Land Use Class 12 1,000 $161 $161,000 0.21 per 1,000 sq. ft Land Use Class 13 1,000 $141 $141,000 0.19 per 1,000 sq. ft The total estimated Equivalent Units for Improvement Area #1 of the PID are shown in Table D- 7 below as calculated based on the Equivalent Unit factors shown above, estimated Land Use Class and number of units estimated to be built within Improvement Area #1. Table D-7 Total Equivalent Units — Improvement Area #1 Land Use Class Planned No. of Units Equivalent Unit Factor Total Equivalent Units Land Use Class 1 38 1.00 38.00 Land Use Class 2 71 0.62 44.02 Land Use Class 3 6 0.60 3.60 Land Use Class 10 (in 1,000 sq. ft) 372.1 0.22 81.86 Land Use Class 11 (in 1,000 sq. ft) 266.1 0.20 53.22 Land Use Class 12 (in 1,000 sq. ft) 255.5 0.21 53.66 Land Use Class 13 in 1,000 sq. ft 264.6 0.19 50.27 Total 324.63 D-6 v6.2 Res 14-45 Exhibit Equivalent Units — Improvement Area #2 The classifications representing the estimated average construction cost per unit relative to the highest estimated average construction cost per unit of Land Use Class 4 in Improvement Area #2 are set forth in Table D-8 below. The total Assessment Part A allocated to Improvement Area #2 is spread to each Land Use type in Improvement Area #2 the basis of the estimated average construction cost for each Land Use Class. This is accomplished by giving each Land Use Class in Improvement Area #2 an Equivalent Unit factor. Equivalent Units are the ratio of the estimated average value at build -out within each Land Use Class, setting the Equivalent Unit factor for Land Use Class 4 in Improvement Area #2 to 1.0. The Equivalent Unit factor for Land Use Class 5 is calculated to be 0.68 ($485,280 - $708,750 = 0.68). The Equivalent Unit factor for each of the remaining Land Use Classes in Improvement Area #2 is calculated accordingly and shown in Table D-8. Table D-8 Estimated Equivalent Units — Improvement Area #2 The total estimated Equivalent Units for Improvement Area #1 of the PID are shown in Table D- 9 below as calculated based on the Equivalent Unit factors shown above, estimated Land Use Class and number of units estimated to be built within Improvement Area #2. Table D-9 Total Equivalent Units — Improvement Area #2 Planned Estimated Estimated No. of Estimated Average Average Units Factor Average Construction Construction 1.00 42.00 Square Feet Cost per Cost per Equivalent Unit Land Use Class per Unit Square Foot Unit Factor Land Use Class 4 4,050 $175 $708,750 1.00 per dwelling unit Land Use Class 5 2,696 $180 $485,280 0.68 per dwelling unit Land Use Class 6 2,069 $178 $368,282 0.52 per dwelling unit The total estimated Equivalent Units for Improvement Area #1 of the PID are shown in Table D- 9 below as calculated based on the Equivalent Unit factors shown above, estimated Land Use Class and number of units estimated to be built within Improvement Area #2. Table D-9 Total Equivalent Units — Improvement Area #2 D-7 V6.2 Res 14-45 Exhibit Planned Equivalent Total No. of Unit Equivalent Land Use Class Units Factor Units Land Use Class 4 42 1.00 42.00 Land Use Class 5 16 0.68 10.88 Land Use Class 6 69 0.52 35.88 Total 127 88.76 D-7 V6.2 Res 14-45 Exhibit Equivalent Units — Improvement Area #3 The classifications representing the estimated average construction cost per unit relative to the highest estimated average construction cost per unit of Land Use Class 7 in Improvement Area #3 are set forth in Table D-10 below. The total Assessment Part A allocated to Improvement Area #3 is spread to each Land Use type in Improvement Area #3 the basis of the estimated average construction cost for each Land Use Class. This is accomplished by giving each Land Use Class in Improvement Area #3 an Equivalent Unit factor. Equivalent Units are the ratio of the estimated average value at build -out within each Land Use Class, setting the Equivalent Unit factor for Land Use Class 7 in Improvement Area #3 to 1.0. The Equivalent Unit factor for Land Use Class 8 is calculated to be 0.68 ($464,112 - $681,596 = 0.68). The Equivalent Unit factor for each of the remaining Land Use Classes in Improvement Area #3 is calculated accordingly and shown in Table D-10. Table D-10 Estimated Equivalent Units — Improvement Area #3 The total estimated Equivalent Units for Improvement Area #3 of the PID are shown in Table D- 11 below as calculated based on the Equivalent Unit factors shown above, estimated Land Use Class and number of units estimated to be built within Improvement Area #3. Table D-11 Total Equivalent Units — Improvement Area #3 Planned Estimated Estimated No. of Estimated Average Average Units Factor Average Construction Construction 1.00 21.00 Square Feet Cost per Cost per Equivalent Unit Land Use Class per Unit Square Foot Unit Factor Land Use Class 7 4,106 $166 $681,596 1.00 per dwelling unit Land Use Class 8 2,637 $176 $464,112 0.68 per dwelling unit Land Use Class 9 2,054 $184 $377,936 0.55 per dwelling unit The total estimated Equivalent Units for Improvement Area #3 of the PID are shown in Table D- 11 below as calculated based on the Equivalent Unit factors shown above, estimated Land Use Class and number of units estimated to be built within Improvement Area #3. Table D-11 Total Equivalent Units — Improvement Area #3 Allocation of Assessments As shown in Section IV of this Service and Assessment Plan, the total amount of the Series 2015 Bonds and the Reimbursement Agreement for Improvement Project A, which represents the total D - 8 v6.2 Res 14-45 Exhibit Planned Equivalent Total No. of Unit Equivalent Land Use Class Units Factor Units Land Use Class 7 21 1.00 21.00 Land Use Class 8 23 0.68 15.64 Land Use Class 9 36 0.55 19.80 Total 80 56.44 Allocation of Assessments As shown in Section IV of this Service and Assessment Plan, the total amount of the Series 2015 Bonds and the Reimbursement Agreement for Improvement Project A, which represents the total D - 8 v6.2 Res 14-45 Exhibit Assessment Part A to be allocated on all Parcels within the PID, is $29,575,000. As shown in Table D-5 above, the Assessment Part A allocation ratio for Improvement Area #1, Improvement Area #2 and Improvement Area #3 are 64.5%, 19.0% and 16.4%, respectively. As a result, the total Assessment Part A allocated to Improvement Area #1 is calculated to be $19,087,620.54 ($29,575,000 X 64.5% = $19,087,620.54), the total Assessment Part A allocated to Improvement Area #2 is calculated to be $5,622,857.55 ($29,575,000 X 19.0% = $5,622,857.55) and the total Assessment Part A allocated to Improvement Area #3 is calculated to be $4,864,521.90 ($29,575,000 x 16.4% = $4,864,521.90). Improvement Area #1 As described above, the total amount of Assessment Part A allocated to Improvement Area #1 is $19,087,620.54. As shown in Table D-7 above, there are a total of 324.63 estimated Equivalent Units in Improvement Area #1 of the PID, resulting in an Assessment Part A per Equivalent Unit of $58,797.94 ($19,087,621 - 324.63 = $58,797.94). The Assessment Part A for each Parcel in Improvement Area #1 is calculated as the product of (i) $58,797.94 multiplied by (ii) the applicable Equivalent Unit value for each Land Use Class to be developed on each Parcel. For example, the Assessment Part A for a Land Use Class 1 (Condo Residential — more than 3,600 square feet) dwelling unit is $58,797.94 (i.e. $58,797.94 X 1.00). A Lot to be developed with a single dwelling unit in Land Use Class 1 would, therefore, have an Assessment of $58,797.94. Table D-12 below sets forth the Assessment Part A per unit for each of the Land Use Classes in Improvement Area #1. Table D-12 Assessment Part A per Unit — Improvement Area #1 Type Planned No. of Units Assessment Part A per Equivalent Unit Equivalent Unit Factor Assessment Part A per Unit Total Assessment Part A Residential Land Use Class 1 38 $58,797.94 1.00 $58,797.94 per dwelling unit $2,234,321.65 Land Use Class 2 71 $58,797.94 0.62 $36,454.72 per dwelling unit $2,588,285.24 Land Use Class 3 6 $58,797.94 0.60 $35,278.76 per dwelling unit $211,672.58 Land Use Class 10 372.10 $58,797.94 0.22 $12,935.55 per 1,000 Sq. Ft $4,813,303.88 Land Use Class 11 266.10 $58,797.94 0.20 $11,759.59 per 1,000 Sq. Ft $3,129,226.27 Land Use Class 12 255.50 $58,797.94 0.21 $12,347.57 per 1,000 Sq. Ft $3,154,803.37 Land Use Class 13 264.60 $58,797.94 0.19 $11,171.61 per 1,000 Sq. Ft $2,956,007.55 Total $19,087,620.54 D-9 v6.2 Res 14-45 Exhibit Improvement Area #2 As described above, the total amount of Assessment Part A allocated to Improvement Area #2 is $5,622,857.55. As shown in Table D-9 above, there are a total of 88.76 estimated Equivalent Units in Improvement Area #2 of the PID, resulting in an Assessment Part A per Equivalent Unit of $63,349.00 ($5,622,858 - 88.76 = $639349.00). The Assessment Part A for each Parcel in Improvement Area #2 is calculated as the product of (i) $63,349.00 multiplied by (ii) the applicable Equivalent Unit value for each Land Use Class to be developed on each Parcel. For example, the Assessment Part A for a Land Use Class 4 (Villa West — more than 3,600 square feet) dwelling unit is $63,349.00 (i.e. $63,349.00 x 1.00). A Lot to be developed with a single dwelling unit in Land Use Class 4 would therefore have an Assessment of $63,349.00. Table D-13 below sets forth the Assessment Part A per unit for each of the Land Use Classes in Improvement Area #2. Table D-13 Assessment Part A per Unit — Improvement Area #2 Improvement Area #3 As described above, the total amount of Assessment Part A allocated to Improvement Area #3 is $4,864,521.90. As shown in Table D -1I above, there are a total of 56.44 estimated Equivalent Units in Improvement Area #3 of the PID, resulting in an Assessment Part A per Equivalent Unit of $86,189.26 ($4,864,521.90 - 56.44 = $86,189.26). The Assessment Part A for each Parcel in Improvement Area #3 is calculated as the product of (i) $86,189.26 multiplied by (ii) the applicable Equivalent Unit value for each Land Use Class to be developed on each Parcel. For example, the Assessment Part A for a Land Use Class 7 (Villa East — more than 3,600 square feet) dwelling unit is $86,189.26 (i.e. $86,189.26 x 1.00). A Lot to be developed with a single dwelling unit in Land Use Class 7 would therefore have an Assessment of $86,189.26. D - 10 v6.2 Res 14-45 Exhibit Assessment Planned Part A per Equivalent Total No. of Equivalent Unit Assessment Type Units Unit Factor Assessment Part A per Unit Part A Residential Land Use Class 4 42 $63,349.00 1.00 $63,349.00 per dwelling unit $2,660,658.15 Land Use Class 5 16 $63,349.00 0.68 $43,077.32 per dwelling unit $689,237.16 Land Use Class 6 69 $63,349.00 0.52 $32,941.48 per dwelling unit $2,272,962.25 Total 127 $5,622,857.55 Improvement Area #3 As described above, the total amount of Assessment Part A allocated to Improvement Area #3 is $4,864,521.90. As shown in Table D -1I above, there are a total of 56.44 estimated Equivalent Units in Improvement Area #3 of the PID, resulting in an Assessment Part A per Equivalent Unit of $86,189.26 ($4,864,521.90 - 56.44 = $86,189.26). The Assessment Part A for each Parcel in Improvement Area #3 is calculated as the product of (i) $86,189.26 multiplied by (ii) the applicable Equivalent Unit value for each Land Use Class to be developed on each Parcel. For example, the Assessment Part A for a Land Use Class 7 (Villa East — more than 3,600 square feet) dwelling unit is $86,189.26 (i.e. $86,189.26 x 1.00). A Lot to be developed with a single dwelling unit in Land Use Class 7 would therefore have an Assessment of $86,189.26. D - 10 v6.2 Res 14-45 Exhibit Table D-14 below sets forth the Assessment Part A per unit for each of the Land Use Classes in Improvement Area #3. Table D-14 Assessment Part A per Unit — Improvement Area #3 D - l 1 v6.2 Res 14-45 Exhibit Assessment Planned Part A per Equivalent Total No. of Equivalent Unit Assessment Type Units Unit Factor Assessment Part A per Unit Part A Residential Land Use Class 7 21 $86,189.26 1.00 $86,189.26 per dwelling unit $1,809,974.49 Land Use Class 8 23 $86,189.26 0.68 $58,608.70 per dwelling unit $1,348,000.05 Land Use Class 9 36 $86,189.26 0.52 $47,404.09 per dwelling unit $1,706,547.37 Total 80 $4,864,521.90 D - l 1 v6.2 Res 14-45 Exhibit DrgfZ Appendix E ASSESSMENT ROLL Res 14-45 Exhibit DRAFT Assessment Roll v6.0 All Improvement Areas Parcel Assessment Part A Administrative Expenses All $29,575,000 (1) Interest rates on the 2015 Bonds are estimated at coupon rate of 7.5% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 6.72% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each year based on the actual budget for maintenance of the improvements. E - 1 Res 14-45 Exhibit Principal and Principal and Maintenance Other Administrative Annual Year Interest' Interest2 Assessment Expenses Installment Part A 1 $1,128,797 $279,324 $10,000 $30,000 $1,448,121 2 $1,963,125 $245,480 $10,200 $30,600 $2,249,405 3 $2,238,125 $246,480 $10,404 $31,212 $2,526,221 4 $2,237,500 $250,408 $10,612 $31,836 $2,530,356 5 $2,240,375 $254,047 $10,824 $32,473 $2,537,719 6 $2,236,375 $257,397 $11,041 $33,122 $2,537,935 7 $2,235,875 $261,458 $11,262 $33,785 $2,542,380 8 $2,238,500 $265,159 $11,487 $34,461 $2,549,606 9 $2,238,875 $269,498 $11,717 $35,150 $2,555,240 10 $2,237,000 $273,404 $11,951 $35,853 $2,558,208 11 $2,237,875 $271,343 $12,190 $36,570 $2,557,978 12 $2,236,125 $275,395 $12,434 $37,301 $2,561,255 13 $2,236,750 $279,955 $12,682 $38,047 $2,567,435 14 $2,239,375 $283,954 $12,936 $38,808 $2,575,073 15 $2,238,625 $289,391 $13,195 $39,584 $2,580,795 16 $2,239,500 $294,126 $13,459 $40,376 $2,587,461 17 $2,236,625 $299,159 $13,728 $41,184 $2,590,695 18 $2,240,000 $304,420 $14,002 $42,007 $2,600,429 19 $2,238,875 $309,838 $14,282 $42,847 $2,605,843 20 $2,238,250 $315,344 $14,568 $43,704 $2,611,866 21 $2,237,750 $320,867 $14,859 $44,578 $2,618,055 22 $2,237,000 $327,337 $15,157 $45,470 $2,624,963 23 $2,240,625 $332,613 $15,460 $46,379 $2,635,078 24 $2,237,875 $339,697 $15,769 $47,307 $2,640,648 25 $2,238,750 $346,376 $16,084 $48,253 $2,649,463 26 $2,237,500 $352,581 $16,406 $49,218 $2,655,705 27 $2,238,750 $360,241 $16,734 $50,203 $2,665,928 28 $2,236,750 $368,147 $17,069 $51,207 $2,673,172 29 $2,236,125 $375,157 $17,410 $52,231 $2,680,923 30 $2,236,125 $384,202 $17,758 $53,275 $2,691,361 31 $2,236,000 $0 $18,114 $15,275 $3,632,420 Total $67,989,797 $9,032,798 $405,681 $1,217,042 $76,409,318 (1) Interest rates on the 2015 Bonds are estimated at coupon rate of 7.5% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 6.72% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each year based on the actual budget for maintenance of the improvements. E - 1 Res 14-45 Exhibit DRAFT Assessment Roll DRAFT Improvement Area #1 Parcel All Assessment Part A $19,087,621 Administrative Expenses Total $43,880,421 $5,829,742 $292,822 $795,334 $50,798,318 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated eaclpey based on the actual budget for maintenance of the improvements. Res 14-45 Exhibit Principal and Principal and Maintenance Other Administrative Annual Year Interest' Interest2 Assessment Expenses Installment Part A 1 $728,522 $180,275 $6,910 $19,362 $935,069 2 $1,266,995 $158,432 $7,048 $19,749 $1,452,224 3 $1,444,479 $159,077 $7,189 $20,144 $1,630,890 4 $1,444,076 $161,612 $7,332 $20,547 $1,633,568 5 $1,445,932 $163,961 $7,479 $20,958 $1,638,330 6 $1,443,350 $166,123 $7,629 $21,377 $1,638,479 7 $1,443,027 $168,745 $7,781 $21,805 $1,641,358 8 $1,444,722 $171,133 $7,937 $22,241 $1,646,032 9 $1,444,964 $173,933 $8,096 $22,686 $1,649,678 10 $1,443,753 $176,454 $8,258 $23,139 $1,651,605 11 $1,444,318 $175,124 $8,423 $23,602 $1,651,467 12 $1,443,189 $177,739 $8,591 $24,074 $1,653,593 13 $1,443,592 $180,682 $8,763 $24,556 $1,657,593 14 $1,445,286 $183,263 $8,938 $25,047 $1,662,534 15 $1,444,802 $186,772 $9,117 $25,548 $1,666,239 16 $1,445,367 $189,828 $9,299 $26,059 $1,670,553 17 $1,443,511 $193,076 $9,485 $26,580 $1,672,653 18 $1,445,690 $196,472 $9,675 $27,111 $1,678,948 19 $1,444,964 $199,969 $9,869 $27,654 $1,682,454 20 $1,444,560 $203,522 $10,066 $28,207 $1,686,355 21 $1,444,237 $207,087 $10,267 $28,771 $1,690,362 22 $1,443,753 $211,262 $10,473 $29,346 $1,694,834 23 $1,446,093 $214,668 $10,682 $29,933 $1,701,376 24 $1,444,318 $219,239 $10,896 $30,532 $1,704,985 25 $1,444,883 $223,550 $11,114 $31,142 $1,710,689 26 $1,444,076 $227,555 $11,336 $31,765 $1,714,732 27 $1,444,883 $232,499 $11,563 $32,401 $1,721,345 28 $1,443,592 $237,601 $11,794 $33,049 $1,726,035 29 $1,443,189 $242,125 $12,030 $33,710 $1,731,053 30 $1,443,189 $247,963 $12,270 $34,384 $1,737,805 31 $1,443,108 $0 $12,516 $9,858 $1,465,482 32 $0 $0 $0 $0 $0 33 $0 $0 $0 $0 $0 34 $0 $0 $0 $0 $0 Total $43,880,421 $5,829,742 $292,822 $795,334 $50,798,318 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated eaclpey based on the actual budget for maintenance of the improvements. Res 14-45 Exhibit DRAFT Assessment Roll DRAFT Improvement Area #2 Parcel All Assessment Part A $5,622,858 Administrative Expenses Total $12,926,355 $1,717,333 $80,063 $234,291 $14,958,042 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each�ye 1 based on the actual budget for maintenance of the improvements. Res 14-45 Exhibit Principal and Principal and Maintenance Other Administrative Annual Year Interest' Interest2 Assessment Expenses Installment Part A 1 $214,609 $53,106 $1,889 $5,704 $275,308 2 $373,233 $46,671 $1,927 $5,818 $427,649 3 $425,517 $46,861 $1,966 $5,934 $480,278 4 $425,398 $47,608 $2,005 $6,053 $481,064 5 $425,945 $48,300 $2,045 $6,174 $482,463 6 $425,184 $48,937 $2,086 $6,297 $482,504 7 $425,089 $49,709 $2,128 $6,423 $483,349 8 $425,588 $50,413 $2,170 $6,552 $484,722 9 $425,659 $51,238 $2,213 $6,683 $485,793 10 $425,303 $51,980 $2,258 $6,816 $486,357 11 $425,469 $51,588 $2,303 $6,953 $486,313 12 $425,137 $52,359 $2,349 $7,092 $486,936 13 $425,255 $53,226 $2,396 $7,234 $488,111 14 $425,754 $53,986 $2,444 $7,378 $489,562 15 $425,612 $55,020 $2,493 $7,526 $490,650 16 $425,778 $55,920 $2,543 $7,676 $491,917 17 $425,232 $56,877 $2,593 $7,830 $492,532 18 $425,873 $57,877 $2,645 $7,987 $494,382 19 $425,659 $58,907 $2,698 $8,146 $495,411 20 $425,541 $59,954 $2,752 $8,309 $496,556 21 $425,445 $61,004 $2,807 $8,475 $497,732 22 $425,303 $62,234 $2,863 $8,645 $499,045 23 $425,992 $63,237 $2,921 $8,818 $500,968 24 $425,469 $64,584 $2,979 $8,994 $502,026 25 $425,636 $65,854 $3,039 $9,174 $503,702 26 $425,398 $67,033 $3,099 $9,357 $504,888 27 $425,636 $68,490 $3,161 $9,545 $506,831 28 $425,255 $69,993 $3,225 $9,735 $508,208 29 $425,137 $71,326 $3,289 $9,930 $509,681 30 $425,137 $73,045 $3,355 $10,129 $511,665 31 $425,113 $0 $3,422 $2,904 $431,439 32 $0 $0 $0 $0 $0 33 $0 $0 $0 $0 $0 34 $0 $0 $0 $0 $0 Total $12,926,355 $1,717,333 $80,063 $234,291 $14,958,042 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each�ye 1 based on the actual budget for maintenance of the improvements. Res 14-45 Exhibit DRAFT Assessment Roll DRAFT Improvement Area #3 Parcel All Assessment Part A $4,864,522 Administrative Expenses Total $11,183,021 $1,485,722 $50,910 $202,693 $12,922,346 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each�ye 1 based on the actual budget for maintenance of the improvements. Res 14-45 Exhibit Principal and Principal and Maintenance Other Administrative Annual Year Interest' Interest2 Assessment Expenses Installment Part A 1 $185,665 $45,944 $1,201 $4,934 $237,745 2 $322,897 $40,377 $1,225 $5,033 $369,532 3 $368,129 $40,541 $1,250 $5,134 $415,054 4 $368,026 $41,187 $1,275 $5,236 $415,725 5 $368,499 $41,786 $1,300 $5,341 $416,926 6 $367,841 $42,337 $1,326 $5,448 $416,952 7 $367,759 $43,005 $1,353 $5,557 $417,673 8 $368,190 $43,614 $1,380 $5,668 $418,852 9 $368,252 $44,327 $1,407 $5,781 $419,768 10 $367,944 $44,970 $1,436 $5,897 $420,246 11 $368,088 $44,631 $1,464 $6,015 $420,198 12 $367,800 $45,297 $1,494 $6,135 $420,726 13 $367,903 $46,047 $1,524 $6,258 $421,731 14 $368,334 $46,705 $1,554 $6,383 $422,977 15 $368,211 $47,599 $1,585 $6,511 $423,906 16 $368,355 $48,378 $1,617 $6,641 $424,991 17 $367,882 $49,206 $1,649 $6,774 $425,511 18 $368,437 $50,071 $1,682 $6,909 $427,100 19 $368,252 $50,962 $1,716 $7,048 $427,978 20 $368,149 $51,868 $1,750 $7,189 $428,956 21 $368,067 $52,776 $1,785 $7,332 $429,961 22 $367,944 $53,841 $1,821 $7,479 $431,084 23 $368,540 $54,709 $1,857 $7,629 $432,734 24 $368,088 $55,874 $1,894 $7,781 $433,637 25 $368,232 $56,972 $1,932 $7,937 $435,073 26 $368,026 $57,993 $1,971 $8,095 $436,085 27 $368,232 $59,253 $2,010 $8,257 $437,752 28 $367,903 $60,553 $2,050 $8,423 $438,929 29 $367,800 $61,706 $2,091 $8,591 $440,188 30 $367,800 $63,194 $2,133 $8,763 $441,890 31 $367,779 $0 $2,176 $2,512 $372,468 32 $0 $0 $0 $0 $0 33 $0 $0 $0 $0 $0 34 $0 $0 $0 $0 $0 Total $11,183,021 $1,485,722 $50,910 $202,693 $12,922,346 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each�ye 1 based on the actual budget for maintenance of the improvements. Res 14-45 Exhibit APPENDIX C DEVELOPER'S BUSINESS PLAN The business plan attached hereto was prepared by the Developer and provided by the Developer solely for purposes of describing the anticipated development plans for the Development. All contracts, letters of intent and other transactions with third parties described in the business plan are non-binding in nature or are subject to the satisfaction of terms and conditions that may be beyond the control of the Developer. No assurances can be provided that the development plans described in the business plan, including the involvement in the Development of all third parties named in the business plan, will be implemented as described in the business plan. Res 14-45 Exhibit (THIS PAGE IS INTENTIONALLY LEFT BLANK) Res 14-45 Exhibit fL II IL11 [C II GIG III G I V II. IH R III I III I IIR IRI��"�� I : y fit 3 2014-12-15 BUILDING HIM annum p I r■■uon&NONE mll:ga;m z4zm oll Him WN, i f � w '- CENTURION AMERICAN Improvement Project A: $26,175,000 Total Issuance Improvement Project A(Deferred): East Residential (Service Area 3) • $3,400,000 Total Issuance Hard Costs: $18,009,400 • Hard Costs: $2,315,598 Bond Issue Costs & Reserves: 0Bond Issue Costs & Reserves • Cap I: $238,000 • Cap I: $3,664,500 • Debt Service Reserves: $340,000 • Debt Service Reserve: $2,225,600 • Other Costs: $505,402 • Other Costs: $2,275,500 Improvement Project B: Future Parking Garage Reimbursement in Service Area I (Deferred Assessment) • $2,425,000 Total Issuance • Structured as a reimbursement Res 14-45 Exhibit BUILDING Common -to -All Service Area #1 (Mixed -Use Villaize Core 1► Service Area #2 (West Residential) 0 Service Area #3 (East Residential) ii74 • Total Values • As Developed Values • Methodology Parcel No. 1 2 PID Appraisal )0 Q Office (Commercial) 6 Building Cor )0 B Commercial Gas Pad )0 B Commercial Gas Pad )0 B Office (Commercial) Gas Pad )0 B Office (Commercial) Gas Pad 8 Public Gas Pad 8 n $ M B Z Gas Pad i 9 C $ A C D Coliseum Z 10 D $ 3 Description n Bank 1 & Retail A 11 2 -acres Hillside Office Complex n D Gymnastics /Dance Studios Public Retail Shoos & Stores 8 12 Res! Condos $ 500,000 B Commercial Gas Pad Bank 2 - Inline Gas Pad with 2 above 9 26 $ 1,350,000 C Commercial Coliseum Childrens Theater/ Museum / Bakery 10 $ 1,600,000 C Hospitality Commercial 114 Boutique Hotel on the Hillside - 80 Villas 11 Single Building with 12 Condos on the .86 Acres 29 C Public Coliseum Back of House for Coliseum - 4 stories $ 900,000 C 12 Condos Condo Residential Coliseum Condos 12 $ 725,000 C Commercial Waterfront Chapel Reception Hall - Tro it 13 Restaurant- Condos $ 2,300,000 C Commercial Waterfront Restaurants on the Water $ 600,000 C 9 condos Condo Residential 9 Condos over restaurants 14 $ 2,000,000 D Commercial Farmers Market Waterfront Retail 15 4 condos over Waterfront Retail $ 2,300,000 D Commercial Waterfront First Floor Retail $ 275,000 D 4 Condos Condo Residential Retail Harbor Residential 16 $ 925,000 D Institutional Waterfront Assisted Living 17 $ D Office Commercial Waterfront Town Hall - TWO -Story Office 18 Waterfront Harbor Retail with 24 Condos above $ 11600,000 D Commercial Waterfront Harbor Retail -First Floor Only $ 1,625,000 D 24 Condos Condo Residential Retail Harbor Residential 19 Single Building with 24 Condos on 1.79 Acres $ 2,000,000 D Commercial Waterfront Harbor Office Wrap -48k s ft $ 2,350,000 D 24 Condos Condo Residential Harbor Wrap Condos 20 $ 1,100,000 F Commercial Plaza Nursing Building - First Floor Plaza Retail 21 $ 2,650,000 F Hospitality (Commercial) Plaza Hotel 1 on plaza 120 rooms 22 $ 2,650,000 D Hospitality (Commercial Plaza Hotel 2 on plaza 120 rooms 914 t A ;nn nnn [ I 1—titntinnal I Dlva Wur<ino - 1 Qi I Inirc nt 19nn ..ft 25 12 Res! Condos $ $ over Retail 6 condos over $ 26 Retail $ 12 Condos over $ 27 Retail $ 28 $ $ 29 12 Condos In Bell $ 30 Tower Complex $ 31 5 West Residential $ 1 East N Commercial N 6 Condos N Commercial A Office A 1: R Office Residential Residential Corner Retail ndo Resider Corner Retail Internal Office D-13 Retail 1600 Resi over Ret CVS Bell Tower Office Bell Tower Condos Office Pad on SH 114 Res 14-45 Exhibit BUILDING • Go _ USIJMRto V.UITNETtSNIR �+ Y oot 14146. P6 391 D.R TL. T.me - '--. Fa a law ® ." \ •,_ `'``'stir•'-.—�... SO �''�,� , s; r� ' `�'• ' 06, d� ASE p AIAGGRA PARTMUSI, f �x,anas wx>, t \ Weni1.^5 AMA. RW AEAUon N. f /Ark Addle. do vol 781 Pt 71 879 7R21. }7! / PAT. CCT. I -LLC% n m z i C m z z D .+rl i Res 14-45 Exhibit BUILDING Contracts: • Primrose • Tresor for Office/Condo Pad • WholeLife Signed LOI's for Pad Sales: • CVS on Davis -Solana Corner • Novo Group for Two Office Tracts on 114 CVS/pharmacy' 4 �MR�S EVELC)E'MENT WH ►LELIFE' Res 14-45 Exhibit BUILDING rf USIIAREDPMTNERiNlP , / :�� �:. `_ � �- _� � -����`•. !'�I Y If1L 1,145. PG 391 / � :�•%,. �� // 7 � 4 D.R T C.T. s _ ARY1 . s ® � � • o o L / ar so GRANADA 11 ✓` ---- f. :. YAGERR[PAR73(!f; .t .`• � ', ., '//.,` — C`Ih 4 - c f W-tb3.^S AMA. Pon AGA -No.1 /Ark AddWM 8Y214. A4 2. Bt7 CR i. 1.MN / Vol 3RR ATC_=7l879 7R2ML ►7! Office & Commercial 4) n M z i C A z z D 1� Res 14-45 Exhibit BUILDING Have contracted a total of 56 Lots out of the 127 Lots in Phase I to local Custom Builders: • Tresor Custom Homes: • Southlake and Carillon Builders • Already working with Architect • Also purchasing office/condo pad • Builds in Granada as well • Veranda Designer Homes • Already working with Architect • Looking to bring daylight basements to community Will build rest of Phase I ourselves with the EB -5 Revolver • $23m to spend annually • We will build all of the Trevi's and most of the Casitas • Financial capability to build 12 Trevi's at once, so people don't live in a construction zone Once PID bonds are sold, we will be emploring Eddie for the model home releases along Solana Boulevard Res 14-45 Exhibit BUILDING n M z i C A z z D S LAS to p"TNERSN,v , / ��P :, `_ '-L �_ �_ • f 00L D.R T L.T. -'� 146. P6 391 12 a LJ AASE 61 GRANADA w 2. Bbd 1 tot s. 1 \ Wa0AWSWJdAW RW AA1kbn NW. f MAdaleB / NY 386214, Pt 71 A 79 MZ14h0w k» / vATC-T. 1.LTi1. Office & Residential 3rd Commercial Party Res 14-45 Exhibit BUILDING 3rd Party Project Construction Budget Square Feet Hotel 1 with podium parking $ 25,807,500 139,500 Town Hall $ 4,685,000 21,000 Hotel 2 with podium parking $ 29,972,000 126,000 Restaurants Phase 1 $ 6,873,500 29,500 Ampitheater $ 3,018,750 12,500 Chapel & Event Center $ 3,750,000 11,000 Homebuilding Revolver $ 22,356,000 60,000 Office/Warehouse with Parking $ 8,990,000 50,000 Retail Hard Corner $ 6,891,441 29,577 $ 112,341,191 479,077 't" 6 &M 14 b QQ1m�' --IIS!-,I!I�I1110!t u�llfillll[Ilifllli��i� � u n IIIOil! --2 - I BUILDING `f Go 1 -.-.-�'".�-•-„.yip USIIAREDDMTNEE6NlR , jj// -_ � ~- _- ' ��-�`” • !'�I Y I,ET,C t 381 s dne MGM LJ Cvo ,(I, -tet Office & Commercial Residential 3rd 3rd Party Party l 1-f C -5r -5 Fun ll ojects pit BUILDING • Residential: • Tresor Custom Homes • Veranda Designer Homes • Windmiller (pending for 13 -lot position) • Balance of Residential to be constructed using EB -5 Funding • Commercial: • Primrose • WholeLife • CVs • Novo G l L , • y .fir. -- ice r COMMe[C131 ..,-.il Resideatial3 a Pt Pavy % of Project under Contract 0 11 /0 3rd Party 0% Residential 3rd Party Commercial Uncontracted Commercial ■ EB -5 Constrction Program Q Res 14-45 Exhibit BUILDING 48 Spaces Podium Parking 2015 (Privately Funded through EB -5) 160+/ -Surface Parking (Privately Funded through EB -5 with HOT proposed Reimbursement) 320+/ -Podium Parking (Privately Funded through EB -5 with HOT proposed Reimbursement) Hotel 2 140 -Rooms 2011 f Potential Future Garage Privately Funded To Support Condo -Wrap Building with Retail First Floor Privately Funded (2018-2020) zeonr%&P { Hotel 1 440+/ -Space Parking Garage 140 -Rooms (Privately Funded with EB -5 Bridge Funding, then reimbursed 2016 -- with Future PID Issuance for 17 Service Area 1 only (5 years +/-) Eves — 4a D Li — CASITA,S — 25 VILLAS (A-2$) lyl ,.....1`. VILLAS {B-2i}— Res 14-45 Exhibit BUILDING [THIS PAGE INTENTIONALLY LEFT BLANK] Res 14-45 Exhibit APPENDIX D FORM OF OPINION OF BOND COUNSEL Res 14-45 Exhibit (THIS PAGE IS INTENTIONALLY LEFT BLANK) Res 14-45 Exhibit LAW OFFICES MECALL, PARKHURST & HORTON L.L.P. 600 CONGRESS AVENUE 717 NORTH HARWOOD 700 N. ST. MARY'S STREET 1860 ONE AMERICAN CENTER NINTH FLOOR 1525 ONE RIVERWALK PLACE AUSTIN, TEXAS 78701-3248 DALLAS, TEXAS 75201-6587 SAN ANTONIO, TEXAS 78205-3503 TELEPHONE: 512 478-3805 TELEPHONE: 214 754-9200 TELEPHONE: 210 225-2800 FACSIMILE: 512472-0871 FACSIMILE: 214754-9250 FACSIMILE: 210225-2984 Proposed Form of Opinion of Bond Counsel An opinion in substantially the following form will be delivered by McCall, Parkhurst & Horton L.L.P., Bond Counsel, upon the delivery of the Bonds, assuming no material changes in facts or law. TOWN OF WESTLAKE, TEXAS SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) DATED FEBRUARY 5, 2015 IN THE PRINCIPAL AMOUNT OF $ AS BOND COUNSEL for the Town of Westlake, Texas (the "Issuer"), we have examined into the legality and validity of the issue of the bonds described above (the "Bonds"), which bear interest from the date specified in the text of the Bonds, until maturity or prior redemption, at the rates and payable on the dates as stated in the text of the Bonds, and maturing and subject to redemption on the dates specified in the text of the Bonds, all in accordance with the Ordinance authorizing the issuance of the Bonds (the "Bond Ordinance") and the Trust Indenture (as defined below). WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and laws of the State of Texas, and have examined and relied upon a transcript of certified proceedings of the Issuer and other pertinent instruments furnished by the Issuer relating to the authorization, issuance and delivery of the Bonds; and we have examined various certificates and documents executed by officers and officials of the Issuer upon which certificates and documents we rely as to certain matters stated below. We have also examined one executed Bond which we found to be in proper form and duly executed. BASED ON SAID EXAMINATION, IT IS OUR OPINION that the Bonds have been duly authorized, and have been duly issued and delivered, all in accordance with law, and that, except as may be limited by laws relating to governmental immunity, bankruptcy, reorganization, and other similar matters affecting creditors' rights or by general principles of equity which permit the exercise of judicial discretion, (i) the Bonds constitute valid and legally binding obligations of the Issuer which are payable as to principal and interest from the sources provided in the Bond Ordinance and the Indenture of Trust between the Issuer and U.S. Bank National Association, dated as of February 1, 2015 (the "Trust Indenture"), (ii) the covenants and agreements in the Trust Indenture constitute valid and binding obligations of the Issuer, (iii) the Bonds constitute valid and legally binding special obligations of the Issuer secured as Bonds under the Trust Indenture, and (iv) the Bonds are payable in accordance with the priorities established in the Trust Indenture from the sources provided therein. THE ISSUER has reserved the right, subject to the restrictions stated in the Trust Indenture, to amend the Trust Indenture in the manner provided therein; and under some (but not all) circumstances amendments thereto must be approved by the registered owners of a majority in principal amount of all outstanding bonds affected by such amendment and secured by the Trust Indenture. THE REGISTERED OWNERS of the Bonds shall never have the right to demand payment of the principal thereof or interest thereon out of any funds raised or to be raised by taxation, or from any source whatsoever other than specified in the Trust Indenture. Res 14-45 Exhibit IT IS FURTHER OUR OPINION, except as discussed below, that the interest on the Bonds is excludable from the gross income of the owners thereof for federal income tax purposes under the statutes, regulations, published rulings, and court decisions existing on the date of this opinion. We are further of the opinion that the Bonds are not "specified private activity bonds" and that, accordingly, interest on the Bonds will not be included as an individual or corporate alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the "Code"). In expressing the aforementioned opinions, we have relied on certain representations, the accuracy ofwhich we have not independently verified, and assume compliance by the Issuer with certain covenants, regarding the use and investment of the proceeds of the Bonds and the use of the property financed and refinanced therewith. In expressing the aforementioned opinions, we have relied on certain representations and covenants regarding the use and investment of the proceeds of the Bonds. We call your attention to the fact that if such representations are determined to be inaccurate or upon a failure by the Issuer to comply with such covenants, interest on the Bonds may become includable in gross income retroactively to the date of issuance of the Bonds. EXCEPT AS STATED ABOVE, we express no opinion as to any other federal, state, or local tax consequences of acquiring, carrying, owning, or disposing of the Bonds. OUR OPINIONS ARE BASED ON EXISTING LAW, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service (the "Service"); rather, such opinions represent our legal judgment based upon our review of existing law and in reliance upon the representations and covenants referenced above that we deem relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income for federal income tax purposes. No assurance can be given whether or not the Service will commence an audit of the Bonds. If an audit is commenced, in accordance with its current published procedures the Service is likely to treat the Issuer as the taxpayer. We observe that the Issuer has covenanted not to take any action, or omit to take any action within its control, that if taken or omitted, respectively, may result in the treatment of interest on the Bonds as includable in gross income for federal income tax purposes. WE CALL YOUR ATTENTION TO THE FACT that the interest on tax-exempt obligations, such as the Bonds, is included in a corporation's alternative minimum taxable income for the purposes of determining the alternative minimum tax imposed on corporations by section 55 of the Code. WE EXPRESS NO OPINION as to any insurance policies issued with respect to the payments due for the principal of and interest on the Bonds, nor as to any such insurance policies issued in the future. OUR SOLE ENGAGEMENT in connection with the issuance of the Bonds is as Bond Counsel for the Issuer, and, in that capacity, we have been engaged by the Issuer for the sole purpose of rendering our opinions with respect to the legality and validity of the Bonds under the Constitution and laws of the State of Texas, and with respect to the exclusion from gross income of the interest on the Bonds for federal income tax purposes, and for no other reason or purpose. The foregoing opinions represent our legal judgment based upon a review of existing legal authorities that we deem relevant to render such opinions and are not a guarantee of a result. We have not been requested to investigate or verify, and have not independently investigated or verified, any records, data, or other material relating to the financial condition or capabilities of the Issuer, or the disclosure thereof in connection with the sale of the Bonds, and have not assumed any responsibility with respect thereto. We express no opinion and make no comment with respect to the marketability of the Bonds. Our role in connection with the Issuer's Official Statement prepared for use in connection with the sale of the Bonds has been limited as described therein. Res 14-45 Exhibit Respectfully, Res 14-45 Exhibit [THIS PAGE INTENTIONALLY LEFT BLANK] Res 14-45 Exhibit APPENDIX E-1 FORM OF TOWN'S DISCLOSURE AGREEMENT Res 14-45 Exhibit (THIS PAGE IS INTENTIONALLY LEFT BLANK) Res 14-45 Exhibit TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) CONTINUING DISCLOSURE AGREEMENT OF THE ISSUER This Continuing Disclosure Agreement dated as of February 1, 2015 (this "Disclosure Agreement") is executed and delivered by and between the Town of Westlake, Texas (the "Issuer") and U.S. Bank National Association (the "Dissemination Agent") with respect to the Issuer's "Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)" (the "Bonds"). The Issuer and the Dissemination Agent covenant and agree as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer and the Dissemination Agent for the benefit of the Owners (as hereinafter defined) and beneficial owners of the Bonds. Unless and until a different filing location is designated by the MSRB or the SEC, all filings made by the Dissemination Agent pursuant to this Agreement shall be filed with the MSRB through EMMA (defined below). SECTION 2. Definitions. In addition to the definitions set forth above and in the Indenture of Trust dated as of February 1, 2015, relating to the Bonds (the "Indenture"), which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Administrator" shall mean the employee or designee of the Town, identified in any indenture of trust or relating to the Bonds, the District's Service and Assessment Plan, or any other agreement or document approved by the Issuer related to the duties and responsibilities of the administration of the District. "Annual Financial Information" shall mean annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in Sections 4(b) through (g) of this Disclosure Agreement. "Annual Issuer Report" shall mean any Annual Bond Disclosure Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Developer" shall mean Maguire Partners — Solana Land, L.P., a Texas limited partnership, and its successors and assigns. "Disclosure Agreement of Developer" shall mean the Continuing Disclosure Agreement of the Developer dated as of February 1, 2015 executed and delivered by the Developer and the Dissemination Agent. "Disclosure Representative" shall mean the Town Manager of the Issuer or his or her designee, or such other officer or employee as the Issuer, may designate in writing to the Dissemination Agent from time to time. Res 14-45 Exhibit "Dissemination Agent" shall mean the Trustee, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Trustee a written acceptance of such designation. "District" shall mean the Solana Public Improvement District. "EMMA" shall mean the Electronic Municipal Market Access System available on the internet at http://emma.msrb.org. "Fiscal Year" shall mean the calendar year from October 1 through September 30. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. "MSRB" shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the SEC to receive reports pursuant to the Rule. "Owner" shall mean the registered owner of any Bonds. "Participating Underwriter" shall mean Jefferies LLC and its successors and assigns. "Rule" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "SEC" shall mean the United States Securities and Exchange Commission. "Tax-exempt" shall mean that interest on the Bonds is excluded from gross income for federal income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax liability. "Trustee" shall mean U.S. Bank National Association, or any successor trustee pursuant to the Indenture. SECTION 3. Provision of Annual Bond Disclosure Reports. (a) The Issuer shall cause and hereby directs the Dissemination Agent to, not later than six months after the end of the Issuer's Fiscal Year, commencing with the Fiscal Year ending September 30, 2014, provide or cause to be provided to the MSRB, in the electronic or other form required by the MSRB, an Annual Issuer Report provided to the Dissemination Agent which is consistent with the requirements of Section 4 of this Disclosure Agreement. In each case, the Annual Issuer Report may be submitted as a single document or as separate documents comprising a package and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Issuer, if prepared and when available, may be submitted separately from the balance of the Annual Issuer Report, and later than the date required in this paragraph for the filing of the Annual Issuer Report if audited financial statements are not available by that date; provided further, however, that the Annual Financial Information must be submitted not later than six 2 Res 14-45 Exhibit months after the end of the Issuer's Fiscal Year. If the Issuer's Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(d). All documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. (b) The Issuer shall or shall cause the Dissemination Agent to: (i) determine the filing address or other filing location of the MSRB each year prior to filing the Annual Issuer Report on the date required in subsection (a); (ii) file the Annual Issuer Report (excluding the audited financial statements of the Issuer, if any, which shall be filed by the Issuer or the Dissemination Agent upon receipt from the Issuer) containing or incorporating by reference the information set forth in Section 4 hereof, and (iii) if the Issuer has provided the Dissemination Agent with the completed Annual Issuer Report and the Dissemination Agent has filed such Annual Issuer Report with the MSRB, then the Dissemination Agent shall file a report with the Issuer certifying that the Annual Issuer Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and that it was filed with the MSRB SECTION 4. Content of Annual Issuer Reports. The Annual Issuer Report for the Bonds shall contain or incorporate by reference, and the Issuer agrees to provide or cause to be provided to the Dissemination Agent, the following: (a) If prepared and when available, the audited financial statements of the Issuer for the most recently ended Fiscal Year, prepared in accordance with generally accepted accounting principles applicable from time to time to the Issuer. If audited financial statements of the Issuer are not available by the date required by Section 3(a), the Issuer shall provide the Annual Financial Information not later than such date. (b) Tables setting forth the following information, as of the end of such Fiscal Year: (i) For the Bonds, the maturity date or dates, the interest rate or rates, the original aggregate principal amount and principal amount remaining Outstanding. (ii) The amounts in the funds and accounts securing the Bonds. (c) Updates to the information in the Service and Assessment Plan ("SAP") as most recently amended or supplemented, including any changes to the methodology for levying the Assessments in Improvement Area #1, Improvement Area #2, and Improvement Area #3. (d) The total amount of Annual Installments, delinquent Annual Installments, Foreclosure Proceeds and prepaid Assessments collected during the immediate preceding billing period (generally, October 1 of the preceding calendar year through January 31 of the current calendar year). (e) The total amount of Annual Installments assessed and collected during such Fiscal Year, together with the amount of delinquent Assessments collected and Assessments prepaid during such Fiscal Year. 3 Res 14-45 Exhibit (f) The principal and interest paid on the Bonds during the most recent Fiscal Year and the minimum scheduled principal and interest required to be paid on the Bonds in the next Fiscal Year. (g) A description of any amendment to this Disclosure Agreement and a copy of any restatements to the Issuer's audited financial statements. See Exhibit B hereto for a form for submitting the information set forth in the preceding paragraph. The Town has designated MuniCap, Inc. as the initial Administrator. The Administrator, and if no Administrator is designated, Town staff, shall prepare the Annual Financial Information. Any or all of the items listed above may be included by specific reference to other documents, including disclosure documents of debt issues of the Issuer, which have been submitted to and are publicly accessible from the MSRB. If the document included by reference is a final offering document, it must be available from the MSRB. The Issuer shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, each of the following is a Listed Event with respect to the Bonds: 1. Principal and interest payment delinquencies. 2. Non-payment related defaults, if material. 3. Unscheduled draws on debt service reserves reflecting financial difficulties. 4. Unscheduled draws on credit enhancements reflecting financial difficulties. 5. Substitution of credit or liquidity providers, or their failure to perform. 6. Adverse tax opinions, the issuance by the IRS of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds. material. 7. Modifications to rights of Owners, if material. 8. Bond calls, if material. 9. Defeasances. 10. Release, substitution, or sale of property securing repayment of the Bonds, if 11. Rating changes. 12. Bankruptcy, insolvency, receivership or similar event of the Issuer. 2 Res 14-45 Exhibit 13. The consummation of a merger, consolidation, or acquisition of the Issuer, or the sale of all or substantially all of the assets of the Issuer, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. 14. Appointment of a successor or additional trustee under the Indenture or the change of name of a trustee, if material. For these purposes, any event described in the immediately preceding paragraph (12) is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Issuer in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Issuer, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Issuer. Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, the Issuer shall promptly notify the Dissemination Agent in writing and the Issuer shall direct the Dissemination Agent to file a notice of such occurrence with the MSRB. The Dissemination Agent shall file such notice no later than the Business Day immediately following the day on which it receives written notice of such occurrence from the Issuer. Any such notice is required to be filed within ten (10) Business Days of the occurrence of such Listed Event. Additionally, the Issuer shall notify the MSRB, in a timely manner, of any failure by the Issuer to provide annual audited financial statements or unaudited financial information as required under this Disclosure Agreement. See Exhibit A hereto for a form for submitting "Notice To MSRB of Failure To File." Any notice under the preceding paragraphs shall be accompanied with the text of the disclosure that the Issuer desires to make, the written authorization of the Issuer for the Dissemination Agent to disseminate such information as provided herein, and the date the Issuer desires for the Dissemination Agent to disseminate the information (which date shall not be more than ten (10) Business Days after the occurrence of the Listed Event or failure to file). In all cases, the Issuer shall have the sole responsibility for the content, design and other elements comprising substantive contents of all disclosures. In addition, the Issuer shall have the sole responsibility to ensure that any notice required to be filed under this Section 5 is filed within (10) Business Days of the occurrence of the Listed Event. (b) The Dissemination Agent shall, within three (3) Business Days of obtaining actual knowledge of the occurrence of any Listed Event with respect to the Bonds, notify the Disclosure Representative of such Listed Event. The Dissemination Agent shall not be required to file a notice of the occurrence of such Listed Event with the MSRB unless and until it receives written instructions from the Disclosure Representative to do so. It is agreed and understood that the duty to make or cause to be made the disclosures herein is that of the Issuer and not that of the Trustee or the Dissemination 5 Res 14-45 Exhibit Agent. It is agreed and understood that the Dissemination Agent has agreed to give the foregoing notice to the Issuer as an accommodation to assist it in monitoring the occurrence of such event, but is under no obligation to investigate whether any such event has occurred. As used above, "actual knowledge" means the actual fact or statement of knowing, without a duty to make any investigation with respect thereto. In no event shall the Dissemination Agent be liable in damages or in tort to the Participating Underwriter, the Issuer or any Owner or beneficial owner of any interests in the Bonds as a result of its failure to give the foregoing notice or to give such notice in a timely fashion. (c) If in response to a notice from the Dissemination Agent under subsection (b), the Issuer determines that the Listed Event under number 2, 7, 8, 10, 13, or 14 of subparagraph (a) above is not material under applicable federal securities laws, the Issuer shall promptly notify the Dissemination Agent and the Trustee (if the Dissemination Agent is not the Trustee) in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (d). (d) If the Dissemination Agent has been instructed by the Issuer to report the occurrence of a Listed Event, the Dissemination Agent shall immediately file a notice of such occurrence with the MSRB. SECTION 6. Termination of Reporting _ Obligations. _ The obligations of the Issuer and the Dissemination Agent under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds, when the Issuer is no longer an obligated person with respect to the Bonds, or upon delivery by the Disclosure Representative to the Dissemination Agent of an opinion of nationally recognized bond counsel to the effect that continuing disclosure is no longer required. So long as any of the Bonds remain Outstanding, the Dissemination Agent may assume that the Issuer is an obligated person with respect to the Bonds until it receives written notice from the Disclosure Representative stating that the Issuer is no longer an obligated person with respect to the Bonds, and the Dissemination Agent may conclusively rely upon such written notice with no duty to make investigation or inquiry into any statements contained or matters referred to in such written notice. If such termination occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event with respect to such series of Bonds under Section 5(d). SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent or successor Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Issuer shall be the Dissemination Agent. The initial Dissemination Agent appointed hereunder shall be the Trustee. SECTION 8. Amendment; Waiver. Notwithstanding any other provisions of this Disclosure Agreement, the Issuer and the Dissemination Agent may amend this Disclosure Agreement (and the Dissemination Agent shall not unreasonably withhold its consent to any amendment so requested by the Issuer), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal 0 Res 14-45 Exhibit requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the delivery of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or beneficial owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Issuer shall describe such amendment in the next related Annual Issuer Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(d), and (ii) the Annual Issuer Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. No amendment which adversely affects the Dissemination Agent may be made without its prior written consent (which consent will not be unreasonably withheld or delayed). SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Issuer Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Issuer Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Bond Disclosure Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Agreement, the Dissemination Agent may (and, at the request of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Bonds, shall, upon being indemnified to its satisfaction as provided in the Indenture), or any Owner or beneficial owner of the Bonds may, take such actions as may be necessary and appropriate to cause the Issuer, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture with respect to the Bonds, and the sole remedy under this Disclosure Agreement in the event of any failure of the Issuer to comply with this Disclosure Agreement shall be an action to mandamus or specific performance. A default under this Disclosure Agreement by the Issuer shall not be deemed a default under the Disclosure Agreement of Developer by the Developer, and a default under the Disclosure Agreement 7 Res 14-45 Exhibit of the Developer by the Developer shall not be deemed a default under this Disclosure Agreement by the Issuer. SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall not have any duty with respect to the content of any disclosures made pursuant to the terms hereof. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and no implied covenants shall be read into this Disclosure Agreement with respect to the Dissemination Agent. To the extent permitted by law, the Issuer agrees to hold harmless the Dissemination Agent, its officers, directors, employees and agents, but only with funds to be provided by the Developer or from Assessments collected from the property owners in Improvement Area #1, Improvement Area #2 and Improvement Area #3 of the District, against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct; provided, however, that nothing herein shall be construed to require the Issuer to indemnify the Dissemination Agent for losses, expenses or liabilities arising from information provided to the Dissemination Agent by the Developer or the failure of the Developer to provide information to the Dissemination Agent as and when required under the Disclosure Agreement of Developer. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment in full of the Bonds. Nothing in this Disclosure Agreement shall be construed to mean or to imply that the Dissemination Agent is an "obligated person" under the Rule. The Dissemination Agent is not acting in a fiduciary capacity in connection with the performance of its respective obligations hereunder. The fact that the Dissemination Agent may have a banking relationship with the Issuer or any person with whom the Issuer contracts in connection with the transaction described in the Indenture, apart from the relationship created by the Indenture or this Disclosure Agreement, shall not be construed to mean that the Dissemination Agent has actual knowledge of any event described in Section 5 above, except as may be provided by written notice to the Dissemination Agent pursuant to this Disclosure Agreement. The Dissemination Agent may, from time to time, consult with legal counsel of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or their respective duties hereunder, and the Dissemination Agent shall not incur any liability and shall be fully protected in acting in good faith upon the advice of such legal counsel. UNDER NO CIRCUMSTANCES SHALL THE DISSEMINATION AGENT OR THE ISSUER BE LIABLE TO THE OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER OR THE DISSEMINATION AGENT, RESPECTIVELY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS DISCLOSURE AGREEMENT, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. THE DISSEMINATION AGENT IS UNDER NO OBLIGATION NOR IS IT REQUIRED TO BRING SUCH AN ACTION. SECTION 12. Assessment Timeline. The basic expected timeline for the collection of Assessments and the anticipated procedures for pursuing the collection of delinquent Assessments is Res 14-45 Exhibit set forth in Exhibit C which is intended to illustrate the general procedures expected to be followed in enforcing the payment of delinquent Assessments. SECTION 13. No Personal Liability. No covenant, stipulation, obligation or agreement of the Issuer or Dissemination Agent contained in this Disclosure Agreement shall be deemed to be a covenant, stipulation, obligation or agreement of any present or future council members, officer, agent or employee of the Issuer or Dissemination Agent in other than that person's official capacity. SECTION 14. Severability. In case any section or provision of this Disclosure Agreement, or any covenant, stipulation, obligation, agreement, act or action, or part thereof made, assumed, entered into, or taken thereunder or any application thereof, is for any reasons held to be illegal or invalid, such illegality or invalidity shall not affect the remainder thereof or any other section or provision thereof or any other covenant, stipulation, obligation, agreement, act or action, or part thereof made, assumed, entered into, or taken thereunder (except to the extent that such remainder or section or provision or other covenant, stipulation, obligation, agreement, act or action, or part thereof is wholly dependent for its operation on the provision determined to be invalid), which shall be construed and enforced as if such illegal or invalid portion were not contained therein, nor shall such illegality or invalidity of any application thereof affect any legal and valid application thereof, and each such section, provision, covenant, stipulation, obligation, agreement, act or action, or part thereof shall be deemed to be effective, operative, made, entered into or taken in the manner and to the full extent permitted by law. SECTION 15. Sovereign Immunity. The Dissemination Agent agree that nothing in this Disclosure Agreement shall constitute or be construed as a waiver of the Issuer's sovereign or governmental immunities regarding liability or suit. SECTION 16. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriter and the Owners and the beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Nothing in this Disclosure Agreement is intended or shall act to disclaim, waive or otherwise limit the duties of the Issuer under federal and state securities laws. SECTION 17. Dissemination Agent Compensation. The Issuer shall pay or reimburse the Dissemination Agent, but only with funds to be provided by the Developer or from Assessments collected from the property owners in Improvement Area #1, Improvement Area #2 and Improvement Area #3 of the District, for its fees and expenses for the Dissemination Agent's services rendered in accordance with this Disclosure Agreement. SECTION 18. Governing Law. This Disclosure Agreement shall be governed by the laws of the State of Texas. SECTION 19. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. [remainder of page left blank intentionally] 0 Res 14-45 Exhibit TOWN OF WESTLAKE, TEXAS Mayor SIGNATURE PAGE OF CONTINUING DISCLOSURE AGREEMENT Res 14-45 Exhibit U.S. BANK NATIONAL ASSOCIATION (as Dissemination Agent) IM Authorized Officer SIGNATURE PAGE OF CONTINUING DISCLOSURE AGREEMENT Res 14-45 Exhibit EXHIBIT A NOTICE TO MSRB OF FAILURE TO FILE ANNUAL ISSUER REPORT Name of Issuer: Town of Westlake, Texas Name of Bond Issue: Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) Date of Delivery: , 20_ NOTICE IS HEREBY GIVEN that the Town of Westlake, Texas, has not provided an Annual Issuer Report with respect to the above-named bonds as required by the Continuing Disclosure Agreement dated _, 2014, between the Issuer and U.S. Bank National Association, as dissemination agent. The Issuer anticipates that the Annual Issuer Report will be filed by Dated: cc: Town of Westlake, Texas U.S. Bank National Association, on behalf of the Town of Westlake, Texas (as Dissemination Agent) IM Title: A-1 Res 14-45 Exhibit EXHIBIT B TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) ANNUAL BOND DISCLOSURE REPORT* Delivery Date: , 20_ TRUSTEE Name: Address: Town: Telephone: Contact Person: U.S. Bank National Association BONDS OUTSTANDING Original CUSIP Maturity Interest Principal Number Date Rate Amount Outstanding Principal Amount Outstanding Interest Amount I i►`[l/ Oki 001 glob 1r.� Fund/ Investment Account Name Description Par Value Book Value Market Value *Excluding Audited Financial Statements of the Issuer RIX Res 14-45 Exhibit ASSETS AND LIABILITIES OF PLEDGED TRUST ESTATE Bonds (Principal Balance) Funds and Accounts [list] TOTAL ASSETS LIABILITIES EQUITY Outstanding Bond Principal Outstanding Program Expenses (if any) TOTAL LIABILITIES Assets Less Liabilities Parity Ratio Form of Accounting ❑ Cash ❑ Accrual ❑ Modified Accrual ITEMS REQUIRED BY SECTION 4(c) - (g) [Insert a line item for each applicable listing] I� Res 14-45 Exhibit EXHIBIT C BASIC TIMELINE FOR ASSESSMENT COLLECTIONS AND PURSUIT OF DELINQUENCIES Date Delinquency Activity Clock (Days) January 31 Assessments are due. February 1 I Assessments Delinquent if not received February 15 15 Issuer forwards payment to Trustee for all collections received as of February 15, along with detailed breakdown. Subsequent payments and relevant details will follow monthly thereafter. Issuer and/or Administrator should be aware of actual and specific delinquencies Issuer and/or Administrator should be aware if Reserve Fund needs to be utilized for debt service payment on March 1. If there is to be a shortfall, the Trustee and Dissemination Agent should be immediately notified. Issuer and/or Administrator should also be aware if, based on collections, there will be a shortfall for September payment. Issuer and/or Administrator should determine if previously collected surplus funds, if any, plus actual collections will be fully adequate for debt service in March and September. At this point, if total delinquencies are under 5% and if there is adequate funding for March and September payments, no further action is anticipated for collection of Assessments except that the Issuer or Administrator, working with the Town Attorney or an appropriate designee, will begin process to cure deficiency. For properties delinquent by more than one year or if the delinquency exceeds $10,000 the matter will be referred for commencement of foreclosure. If there are over 5% delinquencies or if there is inadequate funding in the Pledged Revenue Fund for transfer to the Principal and Interest Account of such amounts as shall be required for the full March and September payments, the collection -foreclosure procedure will C-1 Res 14-45 Exhibit proceed against all delinquent properties. March 1 29/30 Trustee pays bond interest payments to bondholders. Reserve Fund payment to Bond Fund may be required if Assessments are below approximately 50% collection rate. Issuer, or the Trustee on behalf of the Issuer, to notify Dissemination Agent of the occurrence of draw on the Reserve Fund and, following receipt of such notice, Dissemination Agent to notify MSRB of such draw or Fund for debt service. Use of Reserve Fund for debt service payment should trigger commencement of foreclosure on delinquent properties. March 5 33/34 Issuer and/or Administrator to notify Dissemination Agent for disclosure to MSRB of all delinquencies. If any property owner with ownership of property responsible for more than $10,000 of the Assessments is delinquent or if a total of delinquencies is over 5%, or if it is expected that Reserve Fund moneys will need to be utilized for either the March or September bond payments, the Disclosure Representative shall work with Town Attorney's office, or the appropriate designee, to satisfy payment of all delinquent Assessments. April 15 74/75 Preliminary Foreclosure activity commences, and Issuer to notify Dissemination Agent of the commencement of preliminary foreclosure activity. If Dissemination Agent has not received Foreclosure Schedule and Plan of Collections, Dissemination Agent to request same from the Issuer. May 1 89/90 If the Issuer has not provided the Dissemination Agent with Foreclosure Schedule and Plan of Collections, and if instructed by the bondholders under Section 11.2 of the Indenture, Dissemination Agent requests that the Issuer commence foreclosure or provide plan for collection. May 15 103/104 The designated lawyers or law firm will be C-2 Res 14-45 Exhibit preparing the formal foreclosure documents and will provide periodic updates to the Dissemination Agent for dissemination to those bondholders who have requested to be notified of collections progress. The goal for the foreclosure actions is a filing by no later than June 1 (day 120/121). June 1 120/121 Foreclosure action to be filed with the court. June 15 134/135 Issuer notifies Trustee and Dissemination Agent of Foreclosure filing status. Dissemination Agent notifies bondholders. July 1 150/151 If bondholders and Dissemination Agent have not been notified of a foreclosure action, Dissemination Agent will notify the Issuer that it is appropriate to file action. C-3 Res 14-45 Exhibit [THIS PAGE INTENTIONALLY LEFT BLANK] Res 14-45 Exhibit APPENDIX E-2 FORM OF DEVELOPER'S DISCLOSURE AGREEMENT Res 14-45 Exhibit (THIS PAGE IS INTENTIONALLY LEFT BLANK) Res 14-45 Exhibit TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) CONTINUING DISCLOSURE AGREEMENT OF THE DEVELOPER This Continuing Disclosure Agreement dated as of February 1, 2015 (this "Disclosure Agreement") is executed and delivered by and between Maguire Partners — Solana Land, L.P., a Texas limited partnership (the "Developer") and U.S. Bank National Association (the "Dissemination Agent") with respect to the "Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)" (the "Bonds"). The Developer and the Dissemination Agent covenant and agree as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Developer and the Dissemination Agent for the benefit of the Owners (as hereinafter defined) and beneficial owners of the Bonds. Unless and until a different filing location is designated by the MSRB or the SEC, all filings made by the Dissemination Agent pursuant to this Disclosure Agreement shall be filed with the MSRB through EMMA. SECTION 2. Definitions. In addition to the definitions set forth above and in the Indenture of Trust dated as of February 1, 2015, relating to the Bonds (the "Indenture"), which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Administrator" shall mean the employee or designee of the Town, identified in any indenture of trust or relating to the Bonds, the District's Service and Assessment Plan, or any other agreement or document approved by the Issuer related to the duties and responsibilities of the administration of the District. "Developer" shall mean Maguire Partners — Solana Land, L.P., a Texas limited partnership, its successors and assigns, including any Subsequent Third Party Owner. "Disclosure Agreement of Issuer" shall mean the Continuing Disclosure Agreement of the Issuer dated as of February 1, 2015 executed and delivered by the Issuer and the Dissemination Agent. "Disclosure Representative" shall mean the manager of the Developer or his or her designee, or such other officer or employee as Developer may designate in writing to the Dissemination Agent from time to time. "Dissemination Agent" shall mean the Trustee, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Trustee a written acceptance of such designation. "District" shall mean the Solana Public Improvement District. "EMMA" shall mean the Electronic Municipal Market Access System available on the internet at http://emma.msrb.org. Res 14-45 Exhibit "Fiscal Year" shall mean the calendar year from October 1 through September 30. "Issuer" shall mean the Town of Westlake, Texas. "Improvement Project A Improvements" shall mean the authorized improvements which will benefit Improvement Area #1, Improvement Area #2 and Improvement Area #3 (defined as "Improvement Project A" in the Service and Assessment Plan) and as more particularly described Section III.B. of the Service and Assessment Plan and any future updates and/or amendments thereto. "Listed Events" shall mean any of the events listed in Section 4(a) of this Disclosure Agreement. "MSRB" shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the SEC to receive reports pursuant to the Rule. "Owner" shall mean the registered owner of any Bonds. "Participating Underwriter" shall mean Jefferies LLC and its successors and assigns. "Quarterly Improvement Implementation Report" shall mean any Quarterly Improvement Implementation Report provided by the Developer pursuant to, and as described in, Section 3 of this Disclosure Agreement. "Rule" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "SEC" shall mean the United States Securities and Exchange Commission. "Subsequent Third Party Owner" shall have the meaning assigned to such term in Section 3(d) of this Disclosure Agreement. "Trustee" shall mean U.S. Bank National Association, or any successor trustee pursuant to the Indenture. SECTION 3. Quarterly IMprovement Implementation Reports. (a) The Developer shall provide, or cause to be provided, at its cost and expense, to the Dissemination Agent, on or before each March 30, June 30, September 30 and December 30 (beginning September 30, 2014), a Quarterly Improvement Implementation Report containing the information described in this Section 3, and the Dissemination Agent shall provide such information to the MSRB within fifteen (15) calendar days of its receipt thereof. The Developer shall provide, or cause to be provided, such Quarterly Improvement Implementation Report during the period from the delivery of the Bonds until such time as the Developer is no longer responsible for the payment of Annual Installments of Assessments equal to at least 20% of the total Annual Installments of Assessments for any year. Such Quarterly Improvement Implementation Report shall include: 2 Res 14-45 Exhibit (i) Statement with respect to the Developer or any affiliate of the Developer as to the status of development loans and any permanent financing with respect to any development undertaken by the Developer in the District not financed with Bond proceeds, including loan balance, existence of deeds of trust or other similar encumbrances against the property within the District, existence of any default and remaining term; (ii) Statement as to available funds to complete development under construction as contemplated (both Bond financed and non -Bond financed development undertaken by the Developer or any affiliate of the Developer); (iii) Status of parcel and/or lot sales from the Developer to any other party by type and average pricing, as well as anticipated future absorption sales; (iv) A statement as to material changes, if any, in the form, organization or controlling ownership of the Developer; (v) The status of any governmental approvals (other than customary home building permits required after a delivery of a finished lot) required for completion of Improvement Project A Improvements; (vi) Any information regarding the Improvement Project A Improvements or other information as may be reasonably requested by the Issuer relating to the ability of the Developer or any affiliate of the Developer to fulfill its obligations under the Indenture or the SAP; (vii) Written notification of any significant zoning or land use entitlement changes or any other matter that would have a material adverse impact on land values within the District, development of potential of lands within the District or the likelihood of the timely payment of the Assessments levied on land or parcels owned by the Developer; and (viii) Any changes to the land use designation for the property in the District that might negatively impact its development for those purposes identified in the final SAP, as the same may be amended and supplemented from time to time. (b) Additionally, the Developer shall provide or cause to be provided filings as follows: (i) The number, dollar amount, and property type (e.g., developed lots, undeveloped pads, parcels, raw land) under contract with wholesale purchasers and the name of each such purchaser; (ii) A listing of any Subsequent Third Party Owners (defined below) representing at least twenty percent (20%) of the Assessments, the amount of the levy of Assessments against such Subsequent Third Party Owner, and the percentage of such Assessments relative to the entire levy of Assessments; (iii) For each residential home builder, on a per quarter and running total basis, (A) the number of residential units for which construction has begun, (B) the number of residential Res 14-45 Exhibit units for which construction has been completed, and (C) the number of residential units which have been sold to end users and the average sales price therefor; (iv) For each residential home builder, the estimated date of completion for all residential units expected to be constructed in the District. (v) Coordinate with the Administrator to prepare, the amount of Assessments delinquent greater than six months, one year and two years, and, if delinquencies amount to more than five percent (5%) of aggregate amount of Assessments due in any year, a list of property owners whose Assessments are delinquent. (vi) Coordinate with the Administrator to prepare, the amount of delinquent Assessments by Fiscal Year: (1) which are subject to institution of foreclosure proceedings (but as to which such proceedings have not been instituted); (2) which are currently subject to foreclosure proceeding which have not been concluded; (3) which have been reduced to judgment but not collected; (4) which have been reduced to judgment and collected; and (5) the result of any foreclosure sales of assessed property if the assessed property represents more than three percent (3%) of the total amount of Assessments. (c) With respect to the Project Fund for the Improvement Project A Improvements, the Developer shall provide or cause to be provided filings as follows: (i) With respect to the design -engineering and the Project Fund for the Improvement Project A Improvements, the Developer will establish an accounting and budgeting system that will show: (ii) Total expected costs for design and engineering to be completed after delivery of the Bonds; (iii) Total expected construction budget; (iv) Construction budget allocated to progress "Milestones;" (v) Forecast construction "Milestones" of progress; (vi) Forecast completion date; and (vii) Forecast Issuer acceptance date. The Developer shall prepare, within ninety (90) days of the issuance of the Bonds, a schedule reflecting the points listed above for each of the Improvement Project A Improvements within the District to be funded by the Bond proceeds. Monthly design and construction expenditure progress reports, reflecting the points listed above, will be summarized by the Developer on a quarterly basis to reflect the progress and conformance with the overall project budget. These quarterly summaries will be filed with the Dissemination Agent. Budget overruns in excess of $250,000 per quarter or delays of greater than sixty (60) days will be highlighted and explained and the Developer shall include a plan to remedy the situation. 2 Res 14-45 Exhibit (d) If the Developer sells, assigns or otherwise transfers ownership of real property in the District to a third party, which results in such third parry owning property representing at least twenty percent (20%) of the total Annual Installments of the Assessments first coming due after such transfer of ownership (a "Subsequent Third Party Owner"), the Developer shall require such Subsequent Third Party Owner to comply with the Developer's disclosure obligations hereunder with respect to such acquired real property for so long as such Subsequent Third Party Owner is the owner of property representing at least twenty percent (20%) of the total of Annual Installments of the Assessments next coming due. The Developer shall deliver to the Dissemination Agent, a written acknowledgement from each Subsequent Third Party Owner, acknowledging its obligations under this Disclosure Agreement. SECTION 4. Event Reporting Obligations of Developer. (a) Whenever the Developer or an affiliate of the Developer obtains actual knowledge of the occurrence of one or more of the following events, the Developer shall notify, or cause such affiliate to notify, the Dissemination Agent of such occurrences and the Dissemination Agent shall immediately report and file a notice of such event with the MSRB. Any such notice is required to be filed within ten (10) business days of the occurrence: (i) Failure to pay any real property taxes or Assessments levied within the District on a parcel owned by the Developer, or an affiliate of the Developer; (ii) Material damage to or destruction of any development or improvements, including the authorized improvements within the District; (iii) Material default by the Developer or any affiliate of the Developer on any loan with respect to the development or permanent financing of the District development undertaken by the Developer or any affiliate of the Developer; (iv) Material default by the Developer or any affiliate of the Developer on any loan secured by property within the District owned by the Developer or any affiliate of the Developer; (v) The bankruptcy filing of the Developer or of any affiliate of the Developer or any determination that the Developer or any affiliate of the Developer is unable to pay its debts as they become due; (vi) The consummation of a merger, consolidation, or acquisition of the Developer, or the sale of all or substantially all of the assets of the Developer, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (vii) The filing of any lawsuit with claim for damage, in excess of $1,000,000 against the Developer or any affiliate of the Developer which may adversely affect the completion of development or litigation which would materially adversely affect the financial condition of the Developer or any affiliate of the Developer; and 5 Res 14-45 Exhibit (viii) Any change in the legal structure, chief executive officer or controlling ownership of the Developer or any affiliate of the Developer. For purposes of Sections 3 and 4, the term "affiliate" shall mean an entity that owns property within the District and is controlled by, controls, or is under common control of the Developer. Any notice under the preceding paragraph shall be accompanied with the text of the disclosure that the Developer desires to make, the written authorization of the Developer for the Dissemination Agent to disseminate such information as provided herein, and the date the Developer desires for the Dissemination Agent to disseminate the information (which date shall not be more than ten (10) Business Days after the occurrence of the Listed Event). In all cases, the Developer shall have the sole responsibility for the content, design and other elements comprising substantive contents of all disclosures. In addition, the Developer shall have the sole responsibility to ensure that any notice required to be filed under this Section 4 is filed within ten (10) Business Days of the occurrence of the Listed Event. (b) If the Dissemination Agent has been instructed by the Developer to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB within one (1) Business Day of its receipt of such written instructions from the Developer. SECTION 5. Termination of Reporting Obligations. (a) The obligations of the Developer, including any Subsequent Third Party Owner, and the Dissemination Agent under this Disclosure Agreement shall terminate (i) upon the legal defeasance, prior redemption or payment in full of all of the Bonds or (ii) when the Developer, including any Subsequent Third Party Owner, is no longer responsible for the payment of Annual Installments of Assessments equal to at least 20% of the total Annual Installment of Assessments for any year. (b) At such time that the Developer, including any Subsequent Third Parry Owner, is no longer responsible for payment of Annual Installments of Assessments equal to at least 20% of the total Annual Installments of Assessment for any year, the District Administrator shall provide written notice to the Developer that no party is responsible for the payment of Annual Installments of Assessments equal to at least 20% of the total Annual Installment of Assessments for any year (the "Termination Notice"). The Developer shall immediately provide, or cause to be provided, the Termination Notice to the Dissemination Agent, and the Dissemination Agent shall provide such Termination Notice to the MSRB within ten (10) Business Days of its receipt thereof. SECTION 6. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent or successor Dissemination Agent to assist it in carrying out the Developer's obligations under this Disclosure Agreement, and may discharge such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Issuer shall be the Dissemination Agent. The initial Dissemination Agent appointed hereunder shall be the Trustee. SECTION 7. Amendment; Waiver. Notwithstanding any other provisions of this Disclosure Agreement, the Developer and the Dissemination Agent may amend this Disclosure Agreement (and the Dissemination Agent shall not unreasonably withhold its consent to any 0 Res 14-45 Exhibit amendment so requested by the Developer), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a) or 4, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Developer, or the type of business conducted; and (b) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or beneficial owners of the Bonds. No amendment which adversely affects the Dissemination Agent may be made without its prior written consent (which consent will not be unreasonably withheld or delayed). SECTION 8. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Developer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in addition to that which is required by this Disclosure Agreement. If the Developer chooses to include any information in any Quarterly Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Developer shall have no obligation under this Disclosure Agreement to update such information or include it in any future notice of occurrence of a Listed Event. SECTION 9. Default. In the event of a failure of the Developer to comply with any provision of this Disclosure Agreement, the Dissemination Agent may (and, at the request of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Bonds, shall, upon being indemnified to its satisfaction as provided in the Indenture), or any Owner or beneficial owner of the Bonds may, take such actions as may be necessary and appropriate to cause the Developer to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture with respect to the Bonds, and the sole remedy under this Disclosure Agreement in the event of any failure of the Developer to comply with this Disclosure Agreement shall be an action to mandamus or specific performance. A default under this Disclosure Agreement by the Developer shall not be deemed a default under the Disclosure Agreement of Issuer by the Issuer, and a default under the Disclosure Agreement of the Issuer by the Issuer shall not be deemed a default under this Disclosure Agreement by the Developer. SECTION 10. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall not have any duty with respect to the content of any disclosures made pursuant to the terms hereof. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and no implied covenants shall be read into this Disclosure Agreement with respect to the Dissemination Agent. To the extent permitted by law, the Developer agrees to hold harmless the Dissemination Agent, its officers, directors, employees and agents, against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's 7 Res 14-45 Exhibit negligence or willful misconduct. The obligations of the Developer under this Section shall survive resignation or removal of the Dissemination Agent and payment in full of the Bonds. Nothing in this Disclosure Agreement shall be construed to mean or to imply that the Dissemination Agent is an "obligated person" under the Rule. The Dissemination Agent is not acting in a fiduciary capaTown in connection with the performance of its respective obligations hereunder. The fact that the Dissemination Agent may have a banking relationship with the Developer or any person with whom the Developer contracts in connection with the transaction described in the Indenture, apart from the relationship created by this Disclosure Agreement, shall not be construed to mean that the Dissemination Agent has actual knowledge of any event described in Section 4 above, except as may be provided by written notice to the Dissemination Agent pursuant to this Disclosure Agreement. The Dissemination Agent shall not in any event incur any liability with respect to (i) any action taken or omitted to be taken in good faith upon advice of legal counsel given with respect to any question relating to duties and responsibilities of the Dissemination Agent hereunder, or (ii) any action taken or omitted to be taken in reliance upon any document delivered to the Dissemination Agent and believed to be genuine and to have been signed or presented by the proper parry or parties. The Dissemination Agent may, from time to time, consult with legal counsel of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or their respective duties hereunder, and the Dissemination Agent shall not incur any liability and shall be fully protected in acting in good faith upon the advice of such legal counsel. UNDER NO CIRCUMSTANCES SHALL THE DISSEMINATION AGENT OR THE DEVELOPER BE LIABLE TO THE OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE DEVELOPER OR THE DISSEMINATION AGENT, RESPECTIVELY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS DISCLOSURE AGREEMENT, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. THE DISSEMINATION AGENT IS UNDER NO OBLIGATION NOR IS IT REQUIRED TO BRING SUCH AN ACTION. SECTION 11. No Personal Liability. No covenant, stipulation, obligation or agreement of the Developer or Dissemination Agent contained in this Disclosure Agreement shall be deemed to be a covenant, stipulation, obligation or agreement of any present or future officer, agent or employee of the Developer or Dissemination Agent in other than that person's official capaTown. SECTION 12. Severability. In case any section or provision of this Disclosure Agreement, or any covenant, stipulation, obligation, agreement, act or action, or part thereof made, assumed, entered into, or taken thereunder or any application thereof, is for any reasons held to be illegal or invalid, such illegality or invalidity shall not affect the remainder thereof or any other section or provision thereof or any other covenant, stipulation, obligation, agreement, act or action, or part thereof made, assumed, entered into, or taken thereunder (except to the extent that such remainder or section or provision or other covenant, stipulation, obligation, agreement, act or action, or part thereof is wholly dependent for its operation on the provision determined to be invalid), which shall be construed and enforced as if such illegal or invalid portion were not contained therein, nor shall such illegality or invalidity of any application thereof affect any legal and valid application thereof, and each such section, provision, covenant, stipulation, obligation, agreement, act or action, or part thereof Res 14-45 Exhibit shall be deemed to be effective, operative, made, entered into or taken in the manner and to the full extent permitted by law. SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Developer, the Dissemination Agent, the Participating Underwriter, and the Owners and the beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Nothing in this Disclosure Agreement is intended or shall act to disclaim, waive or otherwise limit the duties of the Issuer under federal and state securities laws. SECTION 14. Dissemination Agent Compensation. The Developer shall pay or reimburse the Dissemination Agent for its fees and expenses for the Dissemination Agent's services rendered in accordance with this Disclosure Agreement. SECTION 15. Governing Law. This Disclosure Agreement shall be governed by the laws of the State of Texas. SECTION 16. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. [remainder of page left blank intentionally] 0 Res 14-45 Exhibit U.S. Bank National Association (as Dissemination Agent) Authorized Officer SIGNATURE PAGE OF CONTINUING DISCLOSURE AGREEMENT Res 14-45 Exhibit MAGUIRE PARTNERS — SOLANA LAND, L.P., a Texas limited partnership By: MMM Ventures, LLC, a Texas limited liability company its General Partner By: 2M Ventures, LLC, a Delaware limited liability company its Manager and Member IM Name: Mehrdad Moyedi Title: Manager and Member SIGNATURE PAGE OF CONTINUING DISCLOSURE AGREEMENT Res 14-45 Exhibit [THIS PAGE INTENTIONALLY LEFT BLANK] Res 14-45 Exhibit APPENDIX F APPRAISAL Res 14-45 Exhibit (THIS PAGE IS INTENTIONALLY LEFT BLANK) Res 14-45 Exhibit [THIS PAGE INTENTIONALLY LEFT BLANK] Res 14-45 Exhibit APPRAISAL REPORT OF WESTLAKE ENTRADA A Master -Planned Mixed -Use Development to be Located at the Southeast Corner of SH -114 and Precinct Line Road/Davis Boulevard Town of Westlake, Tarrant County, Texas Prepared For: JEFFERIES, LLC Mr. Mark A. Curran Managing Director Public Finance 300 Crescent Court, Suite 500 Dallas, Texas 75201 Mr. Thomas E. Brymer Town Manager Town of Westlake #3 Village Circle, Suite 202 Westlake, Texas 76226 Prepared By: JACKSON CLABORN, INC. Real Estate Consulting and Appraisal Services 5800 W. Plano Parkway, Suite 220 Plano, Texas 75093 Res 14-45 Exhibit Jackson Claborn, Inc. • Real Estate Consulting and Appraisal Services • • Plano, Texas • www.jacksonclaborn.com Jimmy H. Jackson, MAI Allen W. Gardiner, SRA December 16, 2014 David Ray, SRA Mr. Mark A. Curran Mr. Thomas E. Brymer Managing Director Public Finance Town Manager Jefferies, LLC Town of Westlake 300 Crescent Court, Suite 500 #3 Village Circle, Suite 202 Dallas, Texas 75201 Westlake, Texas 76226 RE: Appraisal Report of 127 developed residential lots (West Residential Pod), 80 future residential lots parcel (East Residential Pod), and 31 mixed-use/commercial parcels within the project known as Westlake Entrada, a master -planned, mixed- use development to be located at the southeast corner of SH -114 and Precinct Line Road/Davis Boulevard, Town of Westlake, Tarrant County; T-11-J/K; JCI File No. 1410085 Dear Mr. Curran and Mr. Brymer: At your request and authorization, Jackson Claborn, Inc. has prepared an Appraisal Report of the market value in the above -referenced real property. The subject was physically inspected on November 1, 2014. The date of the report is December 16, 2014. Per the request of the client, we have provided the fee simple estate values for the subject property as follows: ❖ Prospective Value of 127 completed residential lots (West Residential Pod) on 12.510 acres upon completion of development as of September 1, 2015 ❖ Prospective Value of 80 proposed lots (East Residential Pod) on 9.490 acres upon completion of development as of September 1, 2015 ❖ Prospective value of 31 Commercial Parcels upon completion of development as of September 1, 2015 Headquarters: 5800 W. Plano Parkway • Suite 220 • Plano, Texas 75093 • (972) 732-0051 • FAX (972) 733-1403 Res 14-45 Exhibit Mr. Curran and Mr. Brymer December 16, 2014 Page Two Data, information, and calculations leading to the value conclusion are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. Any special assumptions and limiting considerations are noted in Section 2 of this report. Your attention is directed to these "General Assumptions and Limiting Conditions" which are part of this report. We suggest that you thoroughly read and familiarize yourself with these, since the appraisal is based upon these assumptions. The following report sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions, and conclusions were developed based upon, and this report has been prepared in conformance with, our interpretation of the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP) and the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. It must be noted that our opinions of value are subject to the following extraordinary assumptions and hypothetical conditions. In addition, within the confines of our extraordinary assumptions and hypothetical conditions shown below, we may also have included scope of work issues which may or may not necessarily be extraordinary assumptions and hypothetical conditions, yet could contribute to and influence our assignment results: ❖ All information relative to the remaining developed and undeveloped property located within the Town of Westlake Series 2015 PID, including land areas, lot amounts, lot and tract sizes, maximum home and building sizes, and other pertinent data that was provided by G & A Consultants, LLC (site planning, civil engineering, platting, land surveying, landscape architecture), Michael Beaty, the Town of Westlake, and the Tarrant Appraisal District is assumed to be correct. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected. ❖ As the subject represents a proposed construction project, this report contains prospective opinions of value. As such, we have assumed that the market conditions as discussed and considered within this report will be similar on the prospective valuation date. Further, we cannot be held responsible for unforeseeable events that alter market conditions prior to this prospective effective date. The prospective market value date is approximately 10 months from the effective date of this appraisal, due to the development of Phase I taking approximately 10 months to complete. Res 14-45 Exhibit Mr. Curran and Mr. Brymer December 16, 2014 Page Three ❖ The valuations found herein are subject to the Town of Westlake approving and authorizing the creation of the "Town of Westlake Series 2015 Public Improvement District" to finance the costs of certain public improvements for the benefit of property in the district. Thus, as the district is developed, the corresponding tax base increases to a level which allows bonds to be sold. Proceeds from the bond sales are then used to reimburse the developers for certain development expenses. The property in the district totals 85.921 acres and upon completion of development will contain 127 residential lots (West Residential Pod), a developed pod allowing 80 future residential lots (East Residential Pod) and the 31 Commercial Parcels. Proceeds from the bond sales will finance improvements that benefit all of the property. Assessments will be imposed on all property within the "Town of Westlake Series 2015 PID" for the improvements that benefit the entire PID with the public improvements to be provided relative to each phase. This has been assumed in our valuation. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected. ❖ Our "Prospective Value" opinions relative to the subject are based upon the specific site plan that was approved by the Town of Westlake in November 2013. This site plan specifically details the number of residential lots as well as the maximum building sizes for the entire development. Our values are also based upon the assumption that the development described herein is complete by September 1, 2015. Development includes the interior streets and utilities for the 127 residential lots, as well as the completion of water, sewer, and storm drainage and road construction to the borders of the pod allowing 80 future residential lots (East Residential Pod) as well as the 31 Commercial Parcels. It is assumed this information is correct. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected. Res 14-45 Exhibit Mr. Curran and Mr. Brymer December 16, 2014 Page Four ❖ It is noted that the 31 mixed-use pods have a very unique zoning in that they allow for a substantially higher density of development than any other parcels found in the suburban communities of the Dallas/Fort Worth Market area. The Entrada zoning and land use designations are more typical of an established downtown or urban area as compared to the subject's suburban location. As noted throughout the appraisal, the Entrada development plan is also more closely similar to an urban development. As such, a typical valuation utilizing the sales price per square foot of land does not properly account for this superior and unique zoning. In response, the appraisers have valued the 31 mixed-use pods based on the exhibits provided that show the building size allowable in conjunction with the individual pods location, land size and potential highest and best use. This valuation technique utilizes the sales prices of properties located in the general market area and converts them to a price per square foot building space planned or constructed rather than to a per square foot of land size. This comparison is considered to more accurately represent a buyer's motivation for the subject properties. ❖ Local and regional lending institutions appear to remain active within the subject's market for specific projects. Therefore, we specifically assume that the financial markets will continue to function in a competitive, efficient fashion. However, we cannot be held responsible for unforeseeable events that alter market conditions. Jackson Claborn, Inc. does not authorize the out -of -context quoting from or partial reprinting of this Appraisal Report. Further, neither all nor any part of this report shall be disseminated to the general public by the use of media for public communication without the prior written consent of the appraiser signing this report. Based upon an inspection of the property and the information and analysis provided in the following report, it is our opinion that the "Prospective Value" of the fee simple interest in the subject's individual pods upon completion of development on September 1, 2015 will be: Res 14-45 Exhibit Mr. Curran and Mr. Brymer December 16, 2014 Page Five FEE SIMPLE MARKET VALUES - ENTRADA Parcel No. Land Size /Acres Land Size /SF Building Size /SF Land Value /SF Building Value /SF Opinions of Values West 12.510 544,855 127 lots $33.95 N/A $18,500,000 East 9.490 413,240 80 lots $24.20 N/A $10,000,000 1 0.289 12,600 6,000 $59.52 $125.00 $750,000 2 1.928 84,000 112,000 $41.67 $31.25 $3,500,000 3 0.861 37,500 25,000 $53.33 $80.00 $2,000,000 4 1.409 61,360 47,200 $65.19 $84.75 $4,000,000 5 1.515 66,000 44,000 $30.30 $45.45 $2,000,000 6 0.482 21,000 14,000 $71.43 $107.14 $1,500,000 7 1.951 85,000 N/A N/A N/A N/A 8 0.189 8,250 7,500 $60.61 $66.67 $500,000 9 0.510 22,220 20,200 $60.76 $66.83 $1,350,000 10 2.936 127,888 61,500 $12.51 $26.02 $1,600,000 11 0.859 37,400 33,312 $24.06 $27.02 $900,000 12 0.200 8,700 5,800 $83.33 $125.00 $725,000 13A 1.334 58,110 29,800 $39.58 $77.18 $2,300,000 13B Included in 13A Included in 13A 22,509 Included in 13A $26.66 $600,000 14 0.754 32,850 21,900 $60.88 $91.32 $2,000,000 15A 1.033 45,000 30,000 $51.11 $76.67 $2,300,000 15B Included in 15A Included in 15A 10,004 Included in 15A $27.49 $275,000 16 1.136 49,500 33,000 $18.69 $28.03 $925,000 17 0.758 33,000 22,000 N/A N/A N/A 18A 1.302 56,700 37,800 $28.22 $42.33 $1,600,000 18B Included in 18A Included in 18A 60,024 Included in 18A $27.07 $1,625,000 19A 1.791 78,000 48,000 $25.64 $41.67 $2,000,000 19B Included in 19A Included in 19A 86,424 Included in 19A $27.19 $2,350,000 20 0.832 36,250 25,000 $30.34 $44.00 $1,100,000 21 2.009 87,500 97,000 $30.29 $27.32 $2,650,000 22 2.009 87,500 97,000 $30.29 $27.32 $2,650,000 23 2.234 97,312 231,600 $46.24 $19.43 $4,500,000 24 0.172 7,500 2,100 $26.00 $92.86 $195,000 25A 0.620 27,000 18,000 $55.56 $83.33 $1,500,000 25B Included in 25A Included in 25A 30,012 Included in 25A $26.66 $800,000 26A 0.413 18,000 6,000 $41.67 $125.00 $750,000 26B Included in 26A Included in 26A 15,006 Included in 26A $27.32 $410,000 27A 0.517 22,500 15,000 $75.56 $113.33 $1,700,000 27B Included in 27A Included in 27A 43,212 Included in 27A $27.19 $1,175,000 28 1.180 51,412 11,000 $22.56 $105.45 $1,160,000 29 0.986 42,960 17,900 $47.72 $114.53 $2,050,000 30A 0.337 14,694 36,000 $119.10 $48.61 $1,750,000 30B Included in 30A Included in 30A 32,400 Included in 30A $27.16 $880,000 31 1.240 54,000 36,000 $27.78 $41.67 $1,500,000 Cum alative Total $88,070,000 Res 14-45 Exhibit Mr. Curran and Mr. Brymer December 16, 2014 Page Six It is noted that the total value indicated in the preceding chart is a cumulative value and should not be construed as the value of all 31 tracts "as if" sold to a single buyer in a single transaction. This cumulative value is provided for discussion purposes only. Please refer to the attached Appraisal Report, plus exhibits, for documentation of these value opinions contained herein. It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if Jackson Claborn, Inc. can be of further service, please contact us. Respectfully submitted, JACKSON CLABORN, INC. Ernest E. Gatewood, III Vice President - Commercial Division TX -1 324355-G Expiration: December 31, 2014 ernestg�a jacksonclaborn.com Shelley M. Sivakumar Staff Appraiser TX -1 333354-L Expiration: February 29, 2016 shelleys(c)-jacksonclaborn.com Jimmy H. Jackson, MAI President/CEO TX -1324004-G Expiration: November 30, 2016 jimmyj�a jacksonclaborn.com Res 14-45 Exhibit TABLE OF CONTENTS SECTION 1 — Summary of Salient Facts 1 SECTION 2 — Certification and Limiting Conditions 6 Certification 6 General Assumptions and Limiting Conditions 8 SECTION 3 — Premises of the Appraisal 15 SECTION 4 — Presentation of Data Collected 23 Metropolitan Area Data 23 Neighborhood Data 50 Site Analysis 69 SECTION 5 — Highest and Best Use Analysis 77 SECTION 6 — Valuation of the Subject 93 Value Conclusions 241 SECTION 7 — Addendums 243 Res 14-45 Exhibit SECTION 1 - SUMMARY OF SALIENT FACTS Property File Number: 1410085 General Property Type: Mixed -Use Specific Property Type: Proposed mixed-use development General Property Location Southeast corner of SH -114 and Precinct Line Road/Davis Boulevard, Town of Westlake, Tarrant County Mapsco: T-11-J/K School District: Carroll ISD/Westlake Academy (small portion in Northwest ISD) Format: Appraisal Report Date of Appraisal Report: December 16, 2014 Date of Values: September 1, 2015 Date of Inspection: November 1, 2014 Real Estate Interest Appraised: Fee Simple Function of the Appraisal: To provide an opinion of value for the underwriting of development bonds Zoning Designation: PD 1-2 "Planned Development 1, Planning Area 2" Highest & Best Use: As proposed, a mixed-use development 1 Res 14-45 Exhibit Completed Lot Summary, (West Residential Pod): Entrada, West Residential Pod Total Lot Size Total Lots ISIF SF 48 2,625 126,000 21 3,126 65,646 5 2,375 11,875 4 2,250 9,000 1 3,745 3,745 2 4,220 8,440 4 5,026 20,104 1 2,804 2,804 4 4,813 19,252 1 4,975 4,975 2 5,564 11,128 7 4,944 34,608 3 5,089 15,267 1 3,386 3,386 4 2,500 10,000 1 5,419 5,419 4 5,625 22,500 14 5.066 70.924 fiE,! IYI L Res 14-45 Exhibit Land Area Summary/Future Parcels: SUMMARY OF PODS - ENTRADA Parcel No. Block Physical Location Land/Gross Acres Land/Gross SF Max Buildina Size in SF Highest and Best Use West H, I, J, L, M, O North side of Solana Boulevard 12.51 544,855 127 lots Residential Fast E South side of Ciudad Real, east of Santilla del Mar 9.49 413,240 80 lots Residential 1 A SEQ SH 114 and Davis Boulevard 0.29 12,600 6,000 Retail 2 A SEQ SH 114 and Davis Boulevard 1.93 84,000 112,000 Office 3 B E/Q Santilla del Mar and Oche 0.86 37,500 25,000 Retail 4 B E/Q Santilla del Mar and Oche 1.41 61,360 47,200 Retail 5 B FJQ Santilla del Mar and l3che 1.52 66,000 44,000 Office 6 B South R west side Santilla del Mar at Fondon 0.48 21,000 14,000 Retail 7 B W/O Fondon and Oche 1.95 85,000 WA Public Parking Garage 8 B S/S Oche, northeast of Santilla del Mar 0.19 8,250 7,500 Office 9 C NEQ Fondon and eche 0.51 22,220 20,200 Retail 10 C NEQ Fondon and Eche 2.94 127,888 61,500 Institutional 11 C NEQ Fondon and Oche 0.86 37,400 33,312 Institutional / Condos 12 D S/S Fondon, east of Oche 0.20 8,700 5,800 Retail 13A D E/Q Fondon and Oche 1.33 58,110 29,800 Retail 13B D E/Q Fondon and Oche Included in 13A Included in 13A 22,509 Condos 14 D E/C Santilla del Mar and Fondon 0.75 32,850 21,900 Retail 15A D FJS Santilla del Mar, north of Ciudad Real 1.03 45,000 30,000 Retail 15B D EIS Santilla del Mar, north of Ciudad Real Included in 15A Included in 15A 10,004 Condos 16 D East of Ciudad Real roundabout, east of future Luarca 1.14 49,500 33,000 Institutional 17 D WS Cudad Real roundabout, east of future Luarca 0.76 33,000 22,000 Town Hall 18A D WS Ciudad Real roundabout, east of future Luarca 1.30 56,700 37,800 Office 18B D WS Ciudad Real roundabout, east of future Luarca Included in 18A Included in 18A 60,024 Condos 19A D WS Ciudad Real roundabout at future Luarca 1.79 78,000 48,000 Office 19B D WS Ciudad Real roundabout at future Luarca Included in 19A Included in 19A 86,424 Condos 20 F SEC Santilla del Mar and Galisteo 0.83 36,250 25,000 Office 21 F NWC Santilla del Mar and Ciudad Real 2.01 87,500 97,000 Institutional 22 F NEC Santilla del Mar and Qudad Real 2.01 87,500 97,000 Institutional 23 F WC Ciudad Real and Galisteo 2.23 97,312 231,600 Institutional 24 1 NEC Davis Boulevard and Santilla del Mar 0.17 7,500 2,100 Office 25A N SEC Davis Boulevard and Santilla del Mar 0.62 27,000 18,000 Retail 25B N SEC Davis Boulevard and Santilla del Mar Included in 25A Included in 25A 30,012 Condos 26A N E/C Davis Boulevard and Sloane Boulevard 0.41 18,000 6,000 Retail 26B N E/C Davis Boulevard and Sloane Boulevard Included in 26A Included in 26A 15,006 Condos 27A N E/C Davis Boulevard and Sloane Boulevard 0.52 22,500 15,000 Retail 27B N E/C Davis Boulevard and Sloane Boulevard Included in 27A Included in 27A 43,212 Condos 28 O South end of Arta, south of Santilla del Mar 1.18 51,412 11,000 Retail 29 Q SEQ SH 114 and Davis Boulevard 0.99 42,960 17,900 Retail 30A Q SEQ SH 114 and Davis Boulevard 0.34 14,694 36,000 Office 30B Q SEQ SH 114 and Davis Boulevard Included in 30A Included in 30A 32,400 Condos 31 R WS Oche, east of Santilla del Mar 1.24 54,000 36,000 Office 3 Res 14-45 Exhibit Value Indications: "Prospective Values, "Upon Completion of Development": FEE SIMPLE MARKET VALUES - ENTRADA Parcel No. Land Size /Acres Land Size /SF Building Size /SF Land Value /SF Building Value /SF Opinions of Values West 12.510 544,855 127 lots $33.95 N/A $18,500,000 East 9.490 413,240 80 lots $24.20 N/A $10,000,000 1 0.289 12,600 6,000 $59.52 $125.00 $750,000 2 1.928 84,000 112,000 $41.67 $31.25 $3,500,000 3 0.861 37,500 25,000 $53.33 $80.00 $2,000,000 4 1.409 61,360 47,200 $65.19 $84.75 $4,000,000 5 1.515 66,000 44,000 $30.30 $45.45 $2,000,000 6 0.482 21,000 14,000 $71.43 $107.14 $1,500,000 7 1.951 85,000 N/A N/A N/A N/A 8 0.189 8,250 7,500 $60.61 $66.67 $500,000 9 0.510 22,220 20,200 $60.76 $66.83 $1,350,000 10 2.936 127,888 61,500 $12.51 $26.02 $1,600,000 11 0.859 37,400 33,312 $24.06 $27.02 $900,000 12 0.200 8,700 5,800 $83.33 $125.00 $725,000 13A 1.334 58,110 29,800 $39.58 $77.18 $2,300,000 13B Included in 13A Included in 13A 22,509 Included in 13A $26.66 $600,000 14 0.754 32,850 21,900 $60.88 $91.32 $2,000,000 15A 1.033 45,000 30,000 $51.11 $76.67 $2,300,000 15B Included in 15A Included in 15A 10,004 Included in 15A $27.49 $275,000 16 1.136 49,500 33,000 $18.69 $28.03 $925,000 17 0.758 33,000 22,000 N/A N/A N/A 18A 1.302 56,700 37,800 $28.22 $42.33 $1,600,000 18B Included in 18A Included in 18A 60,024 Included in 18A $27.07 $1,625,000 19A 1.791 78,000 48,000 $25.64 $41.67 $2,000,000 19B Included in 19A Included in 19A 86,424 Included in 19A $27.19 $2,350,000 20 0.832 36,250 25,000 $30.34 $44.00 $1,100,000 21 2.009 87,500 97,000 $30.29 $27.32 $2,650,000 22 2.009 87,500 97,000 $30.29 $27.32 $2,650,000 23 2.234 97,312 231,600 $46.24 $19.43 $4,500,000 24 0.172 7,500 2,100 $26.00 $92.86 $195,000 25A 0.620 27,000 18,000 $55.56 $83.33 $1,500,000 25B Included in 25A Included in 25A 30,012 Included in 25A $26.66 $800,000 26A 0.413 18,000 6,000 $41.67 $125.00 $750,000 26B Included in 26A Included in 26A 15,006 Included in 26A $27.32 $410,000 27A 0.517 22,500 15,000 $75.56 $113.33 $1,700,000 27B Included in 27A Included in 27A 43,212 Included in 27A $27.19 $1,175,000 28 1.180 51,412 11,000 $22.56 $105.45 $1,160,000 29 0.986 42,960 17,900 $47.72 $114.53 $2,050,000 30A 0.337 14,694 36,000 $119.10 $48.61 $1,750,000 30B Included in 30A Included in 30A 32,400 Included in 30A $27.16 $880,000 31 1.240 54,000 36,000 $27.78 $41.67 $1,500,000 Cumalative Total $88,070,000 n r Res 14-45 Exhibit Marketing Periods: 127 Lots, West Residential Pod: 80 Future Lots, East Residential Pod: Parcels 1 — 31: Exposure Periods: 23.3± months for the subject's 127 lots after a 10 -month construction period 16.3± months for the subject's future 80 lots after completion in April 2017 Six to 12 months as vacant land Six to 12 months as bulk sale of lots Six to 12 months as vacant land Market Observations: The neighborhood is situated in close proximity to one of the fastest growing suburban communities of the Dallas/Fort Worth Metroplex and is readily accessible to various employment centers. Schools, hospitals, neighboring shopping, recreation area, and cultural activities are in the immediate area or located nearby. Single-family, multifamily, and retail development should continue in the general area. Development by both the private and public sector along with sound land -use planning will help provide orderly development within the neighborhood in the future as the neighborhood becomes more mature. No adverse influences or conditions were noted that would affect values within the neighborhood. Thus, the future long- term outlook for the general area appears to be promising. 5 Res 14-45 Exhibit SECTION 2 - CERTIFICATION AND LIMITING CONDITIONS We certify to the best of our knowledge and belief: ❖ The statements of fact contained in this report are true and correct. ❖ The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and our personal, impartial and unbiased professional analyses, opinions, and conclusions. ❖ We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment. ❖ Our engagement in this assignment was not contingent upon developing or reporting predetermined results. Furthermore, this appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan. ❖ Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. ❖ Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with requirements of the State of Texas and also conforms to the requirements of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). ❖ The reported analysis, opinions, and conclusions were developed, and this report has been prepared in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. ❖ The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. ❖ As of the date of this report, Jimmy H. Jackson, MAI has completed the requirements of the continuing education program of the Appraisal Institute. ❖ As of the date of this report, Ernest E. Gatewood, III has completed the Standards and Ethics Education Requirements for Practicing Affiliates of the Appraisal Institute. 6 Res 14-45 Exhibit ❖ Ernest E. Gatewood, III has made a personal inspection of the property that is the subject of this report. Jimmy H. Jackson, MAI and Shelley M. Sivakumar have not made a personal inspection of the property that is the subject of this report. ❖ We have performed three prior appraisals, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. ❖ No one provided significant real property appraisal assistance to the persons signing this report. ❖ Ernest E. Gatewood, III and Jimmy H. Jackson, MAI are currently certified in the State of Texas, and Shelley M. Sivakumar is currently licensed in the State of Texas. Ernest E. Gatewood, III, Jimmy H. Jackson, MAI, and Shelley M. Sivakumar have completed the continuing education requirements set forth with the State of Texas. ❖ Although other appraisers may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy are maintained at all times with regard to this assignment without conflict of interest. ❖ Ernest E. Gatewood, III, Jimmy H. Jackson, MAI, and Shelley M. Sivakumar are in compliance with the Competency Provision in the USPAP as adopted in FIRREA 1989 and have sufficient education and experience to perform an appraisal of the subject property. Ernest E. Gatewood, III Vice President - Commercial Division TX -1 324355-G Expiration: December 31, 2014 ernestg(c_jacksonclaborn.com Shelley M. Sivakumar Staff Appraiser TX -1 333354-L Expiration: February 29, 2016 shelleysCcD,jacksonclaborn.com Jimmy H. Jackson, MAI President/CEO TX -1324004-G Expiration: November 30, 2016 jimmyi(c�jacksonclaborn.com 7 Res 14-45 Exhibit GENERAL ASSUMPTIONS AND LIMITING CONDITIONS Information Used ❖ No responsibility is assumed for accuracy of information furnished by others or from others, including the client, its officers and employees, or public records. We are not liable for such information or for the work of contractors, subcontractors and engineers. The comparable data relied upon in this appraisal has been confirmed with one or more parties familiar with the transaction unless otherwise noted; all are considered appropriate for inclusion to the best of my factual judgment and knowledge. ❖ Certain information upon which the opinions and values are based may have been gathered by research staff working with the appraiser. Names, professional qualifications and extent of their participation can be furnished to the client upon request. Legal, Engineering, Financial, Structural/Mechanical, Hidden Components, Soil ❖ No responsibility is assumed for matters legal in character or nature, nor matters of survey, nor of any architectural, structural, mechanical or engineering nature. No opinion is rendered as to the legal nature or condition of the title to the property, which is presumed to be good and marketable. The property is appraised assuming it is free and clear of all mortgages, liens or encumbrances, unless otherwise stated in particular parts of this report. ❖ The legal description is presumed to be correct, but we have not confirmed it by survey or otherwise. We assume no responsibility for the survey, any encroachments or overlapping or other discrepancies that might be revealed thereby. ❖ We have inspected, as far as possible by observation, the land and improvements thereon; however, it was not possible to personally observe conditions beneath the soil or hidden structural, or other components, or any mechanical components within the improvement, as a result, no representation is made herein as to such matters unless otherwise specifically stated. The market value opinion assumes that no such conditions exist that would cause a loss of value. We do not warrant against the occurrence of problems arising from any of these conditions. It is assumed that there are no hidden or unapparent conditions to the property, soil, subsoil or structures, which would render them more or less valuable. No responsibility is assumed for any such conditions or for any expense or engineering to discover them. All mechanical components are assumed to be in operating condition standard for the properties of the subject's type. If applicable, the condition of the heating, cooling, ventilation, electric and plumbing equipment is considered to be commensurate with the condition of the balance of the improvements, unless otherwise stated. No judgment is made as 8 Res 14-45 Exhibit to the adequacy of insulation, engineering or energy efficiency of the improvements or equipment. ❖ Information relating to the location or existence of public utilities has been obtained through verbal inquiry to the appropriate utility authority, or has been ascertained from visual evidence. No warranty has been made regarding the exact location or capacities of public utility systems. Subsurface oil, gas or mineral rights were not considered in this report unless otherwise stated. Legality of Use ❖ The appraisal is based on the premise that there is or will be full compliance with all applicable Federal, State and local environmental regulations and laws, unless otherwise stated in the report; and that all appropriate zoning, building and use regulations and restrictions of all types have been or will be complied with and required licenses, consent, permits or other authority, whether local, State, Federal and/or private, have been or can be obtained or renewed for the use intended and considered in the opinion of value. Component Values ❖ The distribution of the total valuation of this report between land and improvements applies only under the proposed program of utilization. The separate valuations of land and buildings must not be used in conjunction with any other appraisal, and are invalid if so used. ❖ A report related to an estate that is less than the whole fee simple estate applies only to the fractional interest involved. The value of this fractional interest, plus the value of all other fractional interests, may or may not equal the value of the entire fee simple estate considered as a whole. ❖ A report relating to the geographic portion of a larger property applies only to such geographic portion and should not be considered as applying with equal validity to other portions of the larger property or tract. The value for such geographic portions, plus the value of all other geographic portions, may or may not equal the value of the entire property or tract considered as a single entity. ❖ All valuations in the report are applicable only under the estimated program of the highest and best use and are not necessarily appropriate under other programs of use. E Res 14-45 Exhibit Auxiliary and Related Studies ❖ No environmental or impact studies, special market study or analysis, highest and best use analysis study or feasibility study has been requested or made by us unless otherwise specified in this report or in my agreement for services. I reserve the unlimited right to alter, amend, revise or rescind any of these statements, findings, opinions, values, estimates or conclusions upon any subsequent study or analysis or previous study or analysis that subsequently becomes available to us. Dollar Values, Purchasinq Power ❖ The opinion of value and the costs used herein are as of the date of the opinion of value. All dollar amounts are based on the purchasing power and price of the United States dollar as of the date of opinion of value. Inclusions ❖ Furnishings and equipment or business operations, except as otherwise specifically indicated, have been disregarded, with only the real estate being considered. Proposed Improvements Conditioned Value ❖ For the purpose of this appraisal, on- or off-site improvements proposed, if any, as well as any repairs required, are considered to be completed in a good and workmanlike manner according to information submitted and/or considered by us. In cases of proposed construction, the report is subject to change upon inspection of the property after construction is complete. The opinion of value, as proposed, is as of the date shown, as if completed and operating at levels shown and projected. Value Change, Dynamic Market Influences ❖ The opinion of value is subject to change with market changes over time. Value is highly related to interest rates, exposure, time, promotional effort, supply and demand, terms of sale, motivation and conditions surrounding the offering. The opinion of value considers the productivity and relative attractiveness of the property both physically and economically in the marketplace. ❖ The opinion of value in this report is not based in whole or in part upon race, color or national origin of the present owners or occupants of the properties in the vicinity of the property appraised. 10 Res 14-45 Exhibit ❖ In the event this appraisal includes the capitalization of income, the opinion of value is a reflection of such benefits and my interpretation of income and yields and other factors which were derived from general and specific market information. Such opinions of value are made as of the date of the opinion of value. As a result, they are subject to change, as the market is dynamic and may naturally change over time. The date upon which the opinion of value applies is only as of the date of valuation, as stated in the letter of transmittal. The appraisal assumes no responsibility for economic or physical factors occurring at some later date which may affect the opinion stated herein. ❖ An appraisal is the product of a professionally trained person, but nevertheless is an opinion only, and not a provable fact. As a personal opinion, a valuation may vary between appraisers based upon the same facts. Thus, the appraiser warrants only that the value conclusions are his best opinion as of the date of valuation. There are no guaranties, either written or implied, that the property would sell for the expressed opinion of value. Sales History ❖ Unless otherwise stated, the appraiser has not reviewed an abstract of title relating to the subject property. No title search has been made, and the reader should consult an attorney or title company for information and data relative to the property ownership and legal description. It is assumed that the subject title is marketable, but the title should be reviewed by legal counsel. Any information given by the appraiser as to a sales history is information that the appraiser has researched; to the best of our knowledge, this information is accurate, but not warranted. Management of the Property ❖ It is assumed that the property which is the subject of this report will be under prudent and competent ownership and management over the entire life of the property. If prudent and competent management and ownership are not provided, this would have an adverse effect upon the value of the property appraised. Confidentiality ❖ We are not entitled to divulge the material (evaluation or valuation) content of this report and analytical findings or conclusions, or give a copy of this report to anyone other than the client or his designee, as specified in writing, except as may be required by the Appraisal Institute, as they may request in confidence for ethic enforcement, or by a court of law with the power of subpoena. 11 Res 14-45 Exhibit ❖ All conclusions and opinions concerning the analyses as set forth herein are prepared by the appraisers whose signatures appear. No change of any item in the report shall be made by anyone other than the appraiser, and the firm shall have no responsibility if any such unauthorized change is made. ❖ Whenever our opinion herein with respect to the existence or absence of fact is qualified by the phrase or phrases "to the best of our knowledge", "it appears" or "indicated", it is intended to indicate that, during the course of our review and investigation of the property, no information has come to our attention which would give us actual knowledge of the existence or absence of such facts. ❖ The client shall notify the appraiser of any error, omission or invalid data herein within 10 days of receipt and return of the report, along with all copies, to the appraiser for corrections prior to any use whatsoever. Neither our name nor this report may be used in connection with any financing plans which would be classified as a public offering under State or Federal Security Laws. Copies, Publication, Distribution, Use of Report ❖ Possession of this report, or any copy thereof, does not carry with it the right of publication, nor may it be used for other than its intended use. The physical report remains the property of the firm for the use of the client, with the fee being for the analytical services only. This report may not be used for any purpose by any person or corporation other than the client or the party to whom the report is addressed. Additional copies may not be made without the written consent of an officer of the firm, and then only in its entirety. ❖ Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations effort, news, sales or other media without my prior written consent and approval of the client. ❖ It has been assumed that the client or representative thereof, if soliciting funds for his project, has furnished to the user of this report complete plans, specifications, surveys and photographs of land and improvements, along with all other information which might be deemed necessary to correctly analyze and appraise the subject property. Trade Secrets ❖ The information found within this report was obtained from Jackson Claborn, Inc. or related companies and/or its individuals and consists of "trade secrets and commercial or financial information" which is privileged and confidential. Notify the appraisers signing the report or an officer of Jackson Claborn, Inc. of any request to reproduce this report in whole or in part. 12 Res 14-45 Exhibit Testimony, Consultation, Completion of Contract for Appraisal Services ❖ A contract for appraisal, consultation or analytical services is fulfilled and the total fee is payable upon completion of the report. The appraisers or those assisting in the preparation of the report will not be asked or required to give testimony in court or hearing because of having made the appraisal in full or in part, nor will they be asked or required to engage in post appraisal consultation with client or third parties except under separate and special arrangement and at an additional fee. ❖ Any subsequent copies of this appraisal report will be furnished on a cost plus expenses basis, to be negotiated at the time of request. Limit of Liability ❖ Liability of the firm and the associates is limited to the fee collected for preparation of the appraisal. There is no accountability or liability to any third party. Fee ❖ The fee for this appraisal or study is for the service rendered, and not for time spent on the physical report. The acceptance of the report by the client takes with it the agreement and acknowledgement that the client will pay the negotiated fee, whether said agreement was verbal or written. The fee is in no way contingent on the value opinion. Special Conditions of Appraisal Report ❖ All information relative to the remaining developed and undeveloped property located within the Town of Westlake Series 2015 PID, including land areas, lot amounts, lot and tract sizes, maximum home and building sizes, and other pertinent data that was provided by G & A Consultants, LLC (site planning, civil engineering, platting, land surveying, landscape architecture), Michael Beaty, the Town of Westlake, and the Tarrant Appraisal District is assumed to be correct. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected. ❖ As the subject represents a proposed construction project, this report contains prospective opinions of value. As such, we have assumed that the market conditions as discussed and considered within this report will be similar on the prospective valuation date. Further, we cannot be held responsible for unforeseeable events that alter market conditions prior to this prospective effective date. The prospective market value date is approximately 10 months from the effective date of this appraisal, due to the development of Phase I taking approximately 10 months to complete. 13 Res 14-45 Exhibit ❖ The valuations found herein are subject to the Town of Westlake approving and authorizing the creation of the "Town of Westlake Series 2015 Public Improvement District" to finance the costs of certain public improvements for the benefit of property in the district. Thus, as the district is developed with housing, the corresponding tax base increases to a level which allows bonds to be sold. Proceeds from the bond sales are then used to reimburse the developers for certain development expenses. The property in the district totals 85.921 acres and upon completion of development will contain 127 residential lots (West Residential Pod), a developed pod allowing 80 future residential lots (East Residential Pod) and the 31 Commercial Parcels. Proceeds from the bond sales will finance improvements that benefit all of the property. Assessments will be imposed on all property within the "Town of Westlake Series 2015 PID" for the improvements that benefit the entire PID with the public improvements to be provided relative to each phase. This has been assumed in our valuation. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected. ❖ Our "Prospective Value" opinions relative to the subject are based upon the specific site plan that was approved by the Town of Westlake in November 2013. This site plan specifically details the number of residential lots as well as the maximum building sizes for the entire development. Our values are also based upon the assumption that the development described herein is complete by September 1, 2015. Development includes the interior streets and utilities for the 127 residential lots, as well as the completion of water, sewer, and storm drainage and road construction to the borders of the pod allowing 80 future residential lots (East Residential Pod) as well as the 31 Commercial Parcels. It is assumed this information is correct. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected. ❖ It is noted that the 31 mixed-use pods have a very unique zoning in that they allow for a substantially higher density of development than any other parcels found in the suburban communities of the Dallas/Fort Worth Market area. The Entrada zoning and land use designations are more typical of an established downtown or urban area as compared to the subject's suburban location. As noted throughout the appraisal, the Entrada development plan is also more closely similar to an urban development. As such, a typical valuation utilizing the sales price per square foot of land does not properly account for this superior and unique zoning. In response, the appraisers have valued the 31 mixed-use pods based on the exhibits provided that show the building size allowable in conjunction with the individual pods location, land size and potential highest and best use. This valuation technique utilizes the sales prices of properties located in the general market area and converts them to a price per square foot building space planned or constructed rather than to a per square foot of land size. This comparison is considered to more accurately represent a buyer's motivation for the subject properties. 14 Res 14-45 Exhibit ❖ Local and regional lending institutions appear to remain active within the subject's market for specific projects. Therefore, we specifically assume that the financial markets will continue to function in a competitive, efficient fashion. However, we cannot be held responsible for unforeseeable events that alter market conditions. 15 Res 14-45 Exhibit SECTION 3 - PREMISES OF THE APPRAISAL Purpose of Appraisal The purpose of this appraisal is to provide an opinion of the market values of the fee simple interest of the prospective market value "upon completion of development". This includes the prospective value of 127 completed residential lots (West Residential Pod) on 12.510 acres upon completion of development as of September 1, 2015, the prospective value of 80 proposed lots (West Residential Pod) on 9.490 acres upon completion of development as of September 1, 2015, and the prospective value of 31 Commercial Parcels upon completion of development as of September 1, 2015 under the reporting requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), as defined by the Appraisal Foundation. Competency of Appraisers The appraisers' specific qualifications are included within this report. These qualifications serve as evidence of their competence for the completion of this appraisal assignment in compliance with the competency provision contained within the Uniform Standards of Professional Appraisal Practice as promulgated by the Appraisal Standards Board of the Appraisal Foundation. The appraisers' knowledge and experience, combined with their professional qualifications, are commensurate with the complexity of this assignment based on the following: ❖ Professional experience ❖ Educational background and training ❖ Business, professional, academic affiliations and activities The appraisers have previously provided consultation and opinion of values for various types of similar properties in Texas. Scope of Assignment and Reporting Process This Appraisal is reported in an "Appraisal Report" format which is intended to comply with the reporting requirements set forth under Standards Rule 2-2 (a) of the Uniform Standards of Professional Appraisal Practice of The Appraisal Foundation. The scope of this appraisal has been to collect, confirm, and report data. Other general market data and conditions have been considered. It is noted that the scope of work is stated throughout the report. The appraisal is based on the information gathered by the appraiser from public records, other identified sources, inspection of the subject property and neighborhood, and selection of comparable sales, listings, and/or rentals within the subject market area. Any inspection noted herein included the property being appraised as well as the neighborhood in which it is located. During the inspection, an inventory of the property attributes was collected based on visual observation. The purpose of any sketch, plans, 16 Res 14-45 Exhibit building/unit layout, etc. provided is to best determine a reasonable estimation of the size and/or improvement layout of the subject and other notable improvements. This information is for referencing purposes only and may not accurately reflect the size, scale, and/or location of the improvement. A survey and/or architect should be relied upon for these purposes. (NOTE: The term "inspection" should not be construed to be a professional engineer's report concerning the condition of the building, structural integrity, or condition of any mechanical items. If the client has concerns of this type, a professional engineer's inspection and report are recommended. That type of inspection is beyond the scope of work of this assignment and the professional abilities of a certified appraiser. This inspection is made only for observation of property attributes). The scope of this Appraisal Report has been to collect, confirm, and report data, while other general market data and conditions have been considered. Consideration and research has been performed regarding the subject property's zoning and surrounding improvements and neighborhood. We have investigated public records for the property's zoning, flood hazard area classification, and property tax assessor's records for attributes of the property. We have also investigated the subject's quality and condition with available market participants to the sale (i.e., broker, owner, seller, buyer, tenant, etc.) and stated the current use of the subject. Consideration of the highest and best use of the land and property as vacant and improved (if applicable) has been analyzed. If applicable to the assignment, we have collected and analyzed the following as necessary to the assignment: ❖ Researched cost estimates from published and recognized data sources and applied recognized depreciation estimates which would lead to the completion of the Cost Approach. ❖ Researched comparable rents of similar improved properties, made a comparative analysis which would lead to completion of market rent and the Income Approach to Value. ❖ Researched the subject's historical income and expenses, published and recognized data sources, as well as comparable data of competing properties' historical income and expenses to project future income and expenses for the subject property which would lead to completion of the Income Approach to Value. ❖ Researched comparable sales, recognized and published data sources, as well as utilized recognized appraisal techniques to arrive at a supportable capitalization rate and/or discount rate which would lead to completion of the Income Approach to Value. ❖ Researched comparable sales of similar improved and vacant land properties and made a comparative analysis which would lead to completion of the Sales Comparison Approach to Value as improved and/or as vacant land. 17 Res 14-45 Exhibit The original source of the comparables is described in the Data Source section of the market grid along with the source of confirmation, if available. The original source is presented first. The sources and data are considered reliable. When conflicting information was provided, the source deemed most reliable has been used. Data believed to be unreliable was not included in the report or used as a basis for the value conclusion. Data obtained during the search for comparables was obtained through recognized private sources as well as public sources (i.e., CoStar, Inc, Multiple Listing Service, LoopNet, Roddy Report, ALN Online, local appraisal districts, county records, etc.) as well as conversations and research with area market participants. It is noted that Texas is a "non -disclosure" state and sales prices are not a part of public record. As Texas is a "non -disclosure state," buyer's and sellers of real property are under no legal obligation to disclose prices of transactions. For this reason, although there may have been numerous other actual sales, those included herein are not only deemed most relevant, but are those upon which reliable sale price data are available. Based on location of comparables as well as client requirements, the comparables may or may not have been inspected. However, significant research was performed on each comparable through various data sources (i.e., tax records, aerial mapping systems, city websites and office resources, county websites and office resources, etc.). The extent of research performed was dependent on the complexity of the assignment and detail needed to adequately represent the comparable. Hence, we have relied upon best and common practices in verifying comparable data utilized herein and have assumed it to be accurate and reliable. In reporting the data collected and analyzed, we have summarized the scope of work used to develop the appraisal as well as summarized the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions. Any exclusions of the sales comparison approach, cost approach, or income approach have been explained. We have also stated the use of the property existing as of the date of value and provided an opinion of highest and best use. We have also summarized the support and rationale for that opinion. The data and analysis found herein is summarized. Adequate data and analysis was provided to give the user an explanation of our thought and rationale. It is noted that more detailed information may be available in our work files that was relied upon to arrive at analysis and conclusions contained in this report. The appraiser performed the appraisal in conformity with the Uniform Standards of professional Appraisal Practice and Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended (12 U.S.C. 3331 et seq.), and any implementing regulations in effect at the time the appraiser signs the appraiser's certification. Hence, the contents of this report and the analysis presented herein is written in an effort to comply and meet all applicable Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended (12 U.S.C. 3331 et seq.) regulations and guideline requirements. However, it is noted that much of these guidelines do not deal directly with the appraisal process and that in the normal course of business we are not expected to be an expert in all of these guidelines. Res 14-45 Exhibit Definition of Value We have been asked to appraise the market value of the subject, which is defined by The Appraisal Foundation in the Uniform Standards of Professional Appraisal Practice, and the Code of Federal Regulators under Chapter 12 C.F.R. Part 34.42(g) as follows: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: ❖ Buyer and seller are typically motivated; ❖ Both parties are well informed or well advised, and each acting in what they consider their own best interests; ❖ A reasonable time is allowed for exposure in the open market; ❖ Payment is made in terms of cash with U.S. dollars or in terms of financial arrangements comparable thereto; and ❖ The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. ' Property Rights The property ownership rights appraised in this appraisal are those known as "fee simple". Fee Simple Interest "Absolute ownership unencumbered by any other interest or estate; subject to the four powers of government. The four powers of government are eminent domain, escheat, police power, and taxation".' Prospective Market Value "A forecast of the value expected at a specified future date. A prospective value opinion is most frequently sought in connection with real estate projects that are proposed, under construction, or under conversion to a new use, or those that have not achieved sellout or a stabilized level of long-term occupancy at the time the appraisal report is written". ' 12 C.F.R. Part 34.42 (g) and The Dictionary of Real Estate Appraisers 5`" Edition, the Appraisal Institute, Chicago, Illinois (U.S. 2010) 2 Ibid. 19 Res 14-45 Exhibit Intended Use of Appraisal It is our understanding that the intended use of the appraisal is to provide an opinion of value for the underwriting of development bonds. Intended User of Appraisal The intended user of this appraisal assignment is identified as Jefferies, LLC and the Town of Westlake. No one other than the stated and specifically identified intended user should rely upon the estimate of value or any other conclusions contained in this appraisal report. Prohibited users include any participants from equity participation and/or debt structured participation, as well as present or future purchasers/lessees or sellers/lessors of the subject property. Jackson Claborn, Inc. assumes no liability to any and all unnamed third party non -intended users who attempt to rely upon this appraisal report for any purposes. Date of Opinion of Value The market value opinions presented in this report are applicable as of September 1, 2015. Date of Property Inspection The subject property was physically inspected by Ernest E. Gatewood, III on November 1, 2014. Identification/Use of the Property The subject's Phase I represents 127 proposed single-family lots on 12.510 acres (10.2 upa) which is part of an original assemblage of 85.921 acres within contiguous multiple tracts of vacant land. The property is being developed as a master -planned, mixed-use development to be known as Westlake Entrada. The subject of this report also represents the future parcels of commercial land (Parcels 1 thru 31), as well as the residential (east) parcel which is planned with an additional 80 single-family lots on 9.490 acres after completion of Phase 1. The subject is further identified as follows: Location: Southeast corner of SH -114 and Precinct Line Road/Davis Boulevard, Westlake, Texas County: Tarrant County Current Owner of Record: Maguire Partners - Solana Land, LP Tax Parcel ID's: 04319087, 04319109, 05243297, 05243343, 07121202, 40888584, 05243351, 04519329, 40778436, 40778479, and 40778487 20 Res 14-45 Exhibit Legal Description: Being 85.921 acres of land situated in the C. M. Throop Survey, Abstract No. 1510, the W. Medlin Survey, Abstract No. 1958, the William Pea Survey, Abstract No. 1246, the Joseph Henry Survey, Abstract No. 1958, Tarrant County, Texas and the W. Medlin Survey, Abstract No. 1588, the William Pea Survey, Abstract No. 1045, and the Joseph Henry Survey, Abstract No. 528 and 529, Denton County, Texas History of the Property The Uniform Standards of Professional Appraisal Practice requires a statement of the sales history of the subject property for the three years prior to the appraisal date. The subject was acquired by the current owner, Maguire Partners - Solana Land, LP, as part of a larger land purchase in August of 2013 for an undisclosed price. The property owner obtained the site by purchasing the underlying note and subsequent foreclosure. The ownership entity had controlled the site for over three years prior to the purchase of Maguire Partners — Solana Land, LP. It is our understanding that 56 of the single family lots in the West Residential Pod are currently under contract. We have not been provided with the contracts and do not know if the lots were priced individually. However, they are reportedly contracted as follows: It is also our understanding that four of the subject's proposed commercial tracts are currently under contract or under signed letter of intent. They are summarized as follows: Pod 23 26 (partial pod) 27 (partial pod) 28 CONTRACTED OR SIGNED LOI'S FOR MIXED-USE PODS ADDraised Value $4,500,000 $750,000 $1,700,000 $1,160,000 Purchasina Entit Wholelife Tresor CVS Primrose Contract Price $5,407,500 $525,000 $2,213,000 $750,000 Price/SF Land $55.57 N/A N/A $14.59 Furthermore, it is our understanding that this valuation will be used in part to assist in establishing future asking prices of the remaining parcels. 21 Res 14-45 Exhibit CONTRACTED LOTS IN WEST RESIDENTIAL POD # Lots Purchasing Entity Total Price Average/Lot 16 Tresor $2,197,556 $137,347 27 Tresor $5,850,575 $216,688 13 Veranda Designer Homes $2,673,303 $205,639 56 $10,721,434 $191,454 It is also our understanding that four of the subject's proposed commercial tracts are currently under contract or under signed letter of intent. They are summarized as follows: Pod 23 26 (partial pod) 27 (partial pod) 28 CONTRACTED OR SIGNED LOI'S FOR MIXED-USE PODS ADDraised Value $4,500,000 $750,000 $1,700,000 $1,160,000 Purchasina Entit Wholelife Tresor CVS Primrose Contract Price $5,407,500 $525,000 $2,213,000 $750,000 Price/SF Land $55.57 N/A N/A $14.59 Furthermore, it is our understanding that this valuation will be used in part to assist in establishing future asking prices of the remaining parcels. 21 Res 14-45 Exhibit Appraisal Analysis and Report Type The Appraisal Standards Board controls the process of making an appraisal of a parcel of real estate. The Board issues rules and guidelines from which all appraisals and resulting reports are made. The process of administration of those rules and guidelines is addressed to the Real Estate Appraiser Commission of each respective state. The Appraisal Standards Board issues the rules and guidelines in the form of a document update published each year by The Appraisal Foundation. That document is entitled "The Uniform Standards of Professional Appraisal Practice" (USPAP). The analysis process is composed of several distinctive steps that appraisers follow to gain a thorough understanding of the property and factors that affect its value. There are two types of reports. They are: Appraisal Report and Restricted Appraisal Report. The following definitions have been adopted for each type of report: ❖ Appraisal Report: A written report prepared under Standards Rule 2-2 (a) ❖ Restricted Appraisal Report: A written report prepared under Standards Rule 2-2 (b) This appraisal of the subject has been presented in the form of an Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2 (a) of the USPAP. Exposure Time Exposure time is the estimated length of time the property would have been offered prior to a hypothetical market value sale on the effective date of appraisal. It is a retrospective estimate based upon an analysis of recent past events, assuming a competitive and open market. It assumes not only adequate, sufficient, and reasonable time but also adequate, sufficient, and reasonable marketing effort. Exposure time is therefore interrelated with appraisal conclusion of value. An estimate of exposure time is not intended to be a prediction of a date of sale or a simple one -line statement. Instead, it is an integral part of the appraisal analysis and is based upon one or more of the following: ❖ statistical information about days on the market ❖ information gathered through sales verification ❖ interviews of market participants. The reasonable exposure period is a function of price, time, and use. It is not an isolated estimate of time alone. Exposure time is different for various types of real estate and under various market conditions. In consideration of these factors, we have analyzed the following: 22 Res 14-45 Exhibit ❖ exposure periods of comparable sales revealed during the course of this appraisal; ❖ macroeconomic exposure times for the subject property type across the subject MSA and the entire United States as published in multiple articles and websites. ❖ knowledgeable real estate professionals. Based upon the foregoing analysis, an exposure time of six to 12 months is reasonable, defensible, and appropriate. This exposure time assumes the subject would have been competitively priced and aggressively promoted within the market area. Marketing Time Marketing time is the period a prospective investor would forecast to sell the subject property immediately after the date of value, at the value opinion. The marketing time is an estimate of the number of months it will require to sell the subject from the date of value, into the future. The anticipated marketing time is essentially a measure of the perceived level of risk associated with the marketability, or liquidity, of the subject property. The marketing time estimate is based upon the data used in estimating the reasonable exposure time, in addition to an analysis of the anticipated changes in market conditions following the date of appraisal. The future price for the subject (at the end of the marketing time) may or may not equal the value opinion found herein. The future price depends upon unpredictable changes in the physical real estate, demographic and economic trends, real estate markets in general, supply/demand characteristics for the property type, and many other factors. Based upon the premise that present market conditions are the best indicators of future performance, a prudent investor will forecast that, under the conditions described above, the subject will require a marketing time of approximately six to 12 months for the future phases and approximately 23.3± months to sell-out of the 127 residential lots within Phase I after a 10 -month construction period, approximately 16.3± months for the subject's future 80 lots within Phase II after completion in April 2017, and approximately six to 12 months as a bulk sale as lots. 23 Res 14-45 Exhibit SECTION 4 - PRESENTATION OF DATA Metropolitan Area Data In summary, the interaction of the environmental, governmental, social and economic forces has contributed to the diversified economic base of the Metroplex. The overall real estate market throughout the Metroplex is currently experiencing a moderate upward cycle following market conditions currently transpiring across the United States. Future economic recovery is in process. The recovery of the economy should translate into the continued growth of the local real estate markets. Quality of life should continue to remain good due to the abundance of cultural and recreational facilities. Furthermore, the Metroplex is in an excellent position for continued future growth. It has a strong and diverse employment base that enables it to weather economic cycles. Employment and population growth are projected to continue to spur further growth in the real estate market over the next three to five years. Dallas/Fort Worth and the region have excellent accessibility to North America's major markets. DALLAS/FORT WORTH AREA MAP VV I !n'{ !_rea Pk _ erker I:I 1 I. I-wisvllle rlu. 1!,,f ! :•., � ` I:'I Va. I , hd rr,.111 'lIUma MItllrlrl '33x1 Iled,n,l'; {. I 1'11114 Mu; I,f iW'eliYp Pi II I t Il,ocj F�aa "Mo Main 1 ll, I I t n, ., Irl rnrl I W I— ll f_ a, liovul lt Arlington' L r.Awm�•�rl'Filn! r Rd r. Iill: l lfll f lti1III 1 nC,Ixq+faGlnta I ,I 1 '..,4,� 'i Ir111111!IS '•..�!!I I rl;lrll;:-! �!�''.. I:II',rll 1 lI lil til it. tl i L1' rc.*r3 4r�jtur 1 L.ri EL4' rd al nd . 8W411" 9 7 jI + t _ J ILll,d 1,-1 m n;rl„�, .i tlilmil';tly 11 .'Fl u ?Wo h Ini'rn tl 1 1_.,I, �1' I nlc I : .I,,,. rn :Air Itt I el I� lar;rl I'.,II I: I '-Al �Yti at,il 7, Irvini� ol Seo � �'. alias lulesqui Orond Jk �a., -Prairie I, ” rl I io R II 1111111 r .. 11W nhenhl Ir �p Sl7rnr�sl IT - I!' 11'ylla III!I IL II IIIYky ,.�_ 1''1 � 1.&�J =111 it I I� M1 I f AM � F' IYllpr,.0 nnllr ~ i AY Llrcr ,,,.A1.,,,d ♦. y ' 1 1 .,- I I 1 lli : iblll0 . p anba8ter r ml�r Ca '�I M1t��nd f ,0111-�,- r1v¢soitCIN��',s1nn ndlu lt•� 1.n. u�l hlr r...wrv'tl � r 24 Res 14-45 Exhibit •MaYli111 00 Pr r f `hedrnlll Fp t" dllfrl' Rontler� I„t,r! I 77n � ` Ilk. law I ShatlV I.iltltl .� ,5Yores Irl, 7' y�31 ; 4434 �f -� cr1MhoHacl'�r[Jerry iso k,#Il P ” VLakew000l .L..l 8C Ulsho *Drop .lg.zn Illckol �,- Village r� „ meek, iLaka Qellaa •L _ IUorthlage a 1 `Inv HY°; I R q,.YlnrwEartvrr Oaf I - llrl r 7rre11 City11gh Lartonvllle ! a d VIIIa� . -. X' The' 1 : L Colony -y " 1}e9a D VV I !n'{ !_rea Pk _ erker I:I 1 I. I-wisvllle rlu. 1!,,f ! :•., � ` I:'I Va. I , hd rr,.111 'lIUma MItllrlrl '33x1 Iled,n,l'; {. I 1'11114 Mu; I,f iW'eliYp Pi II I t Il,ocj F�aa "Mo Main 1 ll, I I t n, ., Irl rnrl I W I— ll f_ a, liovul lt Arlington' L r.Awm�•�rl'Filn! r Rd r. Iill: l lfll f lti1III 1 nC,Ixq+faGlnta I ,I 1 '..,4,� 'i Ir111111!IS '•..�!!I I rl;lrll;:-! �!�''.. I:II',rll 1 lI lil til it. tl i L1' rc.*r3 4r�jtur 1 L.ri EL4' rd al nd . 8W411" 9 7 jI + t _ J ILll,d 1,-1 m n;rl„�, .i tlilmil';tly 11 .'Fl u ?Wo h Ini'rn tl 1 1_.,I, �1' I nlc I : .I,,,. rn :Air Itt I el I� lar;rl I'.,II I: I '-Al �Yti at,il 7, Irvini� ol Seo � �'. alias lulesqui Orond Jk �a., -Prairie I, ” rl I io R II 1111111 r .. 11W nhenhl Ir �p Sl7rnr�sl IT - I!' 11'ylla III!I IL II IIIYky ,.�_ 1''1 � 1.&�J =111 it I I� M1 I f AM � F' IYllpr,.0 nnllr ~ i AY Llrcr ,,,.A1.,,,d ♦. y ' 1 1 .,- I I 1 lli : iblll0 . p anba8ter r ml�r Ca '�I M1t��nd f ,0111-�,- r1v¢soitCIN��',s1nn ndlu lt•� 1.n. u�l hlr r...wrv'tl � r 24 Res 14-45 Exhibit PPRI�,.. METRO MIF Market Fundamentals PROPER—APD PORTFOLIO RESEARCH Dallas - Fort 10 Fete VoWmrdarnTeneWnunn [�rrnr.mp�rm�pr�va�l,somY TIORTH AMERICA 25 Res 14-45 Exhibit 1P1 Market mattes - F91t 10 Fa4 I lon0a n FundarrleataN Worth 2,014 ECONOMIC OVERVIEW Employment Trends Anneal GroWth Nares Crrarent Value 17mard Pard 13—de Farmcasl.. Om 24 D Dec 2013 2013 {2404 -24131 iN14 -Nut) L dCw,�N nr1 NAKS 99" ewpir.1Fadrlr" 4ua4UaAl Kwo U.S. Memo U4. h#tcm U.S- Manuinel.rnq 262 J.94 04'5 1r,% DD% Trsdn 1,anspads1mamdLMkHm. (A ins 311% 20,% 1:7'% Kla"C I456 OA% R'"M Tri.. we gs? 24% 75'92 1.7 % 0 5% 2.3% 04% WNA TIW* 175 1.31. a,4 sr. 17% i,-p9d 4:3% 1:$% 464E Trim gr. k pn'an Yi'ssr-uw- u' k 1+9 1 27 21 rx .5.3 Z I) I % 06% 1 0% 07% Pinanci al Aawcas 265 1.41 2.15% I I% d..a% 0Z% 2.7% 1,4% C-amr,marl. 343 0.79 10'M 1,19602% 3.1% DZ% Nahrral Raaerrr ei, MkUng and C-ws✓rixtim lei 1.11 21% 31% 1:791 -Qs% #I.% 3.046 Edw.liv+.rd H-Nh Pawnee gag q$r7 94% 115% 5.7% 22% 35% 2t% P3afrmlucndgrid BueinnaSer6gvs 509 1.16 4.6% 215% 3991 15% 34% 20% InfUT"Im ig 128 2.1%s5% -aR Leasure and Howtalti 31 9.94 1.591 2a 2JIS I ,6 2.99E 5%, Od••er Sar ,r: as 149 0.87 - 75% 4'-Y 02"€, 2C'A -22 i ralal EmpfoymerA %%131 1-e4 23% 1-6% t7 i, 413% Z.7% 1316 Ecfinom14'Tl'1 nds lAore Nabs Arran more people, a trend that contlnuers to hold true in Dallas — Fart Wonal, The metra has aid rnDm Shan aC 4100 Jobs over the past 12 rnonlhs. one of the larqei4 nominal pains of any metro in the, U S (and a7 an employment gruyAh rata considerably higher than the U S. average) The prevalence of p5b opportunities has spurred mgrohcant pup dleticn growth due to in. migratlon Pkrpulalndn gfoMh in the nWtraplex m roughly Mice the 41.5 a,rCrage, and one of the top peirr[7r w!r in the PrrR54i rpt migration levels have surpassed 747,13U4 people over rhe past year, exceeding the highs fforn the part cycle Ia Fact C1ahar-Fort Worth hasn't seen thane migration levels since the ea11g 20005 This cDnlynues to contribute to grcyM among populatxm-d&en and krw value add IndusMes such as adminlaAfatrue and support serulaes ;17.000 Jobs added over the last year} retail trade a 70 Jobs}. and wholesale trade 7,400 jciba} 'Afith this Wyat of in-nnratok?n expei:W &dOF tfr49 next fivC ybals err3picyrnent Prov^ in these sectors should owilinueto vastly outpace the national rate and prodide the engine for tulthergramh in D -FW D-FWs diwemltlod *conoiny sMuld continue t4 hum right along, will i Jolx growth arra ong t110 tastrast In the country. A number of 1 mgh-profile companies streets various seducs have a.mct4rrc4 J1 Plims'ba add jobs c the near *fm, whic34 should kdscp employment in the metrop%x ruling. Smte Farm Insurance cont#nlaes to expand its presence in the region, as n Eogned W9,01)0 SF of ctfice leases in Io70 24912 and has d 1.5 million SF rcgo*nml hCadquar cm under to bt *Wpieted in early 21315. The c4i1'pa;ny ha3 hired 1. MO since March of last year, but ie enitly am munced plans in hire an additional 7DO to continue to fill out rt3 f proor in the r rrrT va. The Ictal financial servizes se=r has thrneed, bucking the se blares national trend Companies hke CitiMcaragage and CapitaCnie Financial hays announced plans to add over 1,1070 workers. Also growth in the mortgage serVil*Q Indusby has lad fimtr like Ioandep4t.ccim ,JPhAC, and American I{orne rylortg.Ve 9uexpa.rcl overatFons here. Amazon is ervatigQ over 1,460 pubs, in the m9haplex, and technology sera en;impan,y Aegis Is hiring 1.6W people Dallas -Fort ''hrorth reat.lses a very diverse ewrior ay, and it is, currently 4naelg on all Cyt rid M PROPERTY AND ReiRMLL4 RESEARCH NC)RTH AMERICA tipc`.rr 26 Res 14-45 Exhibit i� Market Fundamental JDb GKmth Year-Over-Yaat — 0*41 ,:" Datles - FQgt 10 Fab Pn Worth 201.1 Largest GontHhulors to Job Growth Ower Last B Months W�ul PROPERTY AND POPIT7L[Q RESEARCH NC)RTH AMP -RICA 27 Res 14-45 Exhibit [�ami�graphic Tr�nda Annual Grmsth Valps Doc 2013 ac 20t3 ('3M • 20135 Q201# - 20151 PupLiaunn• nese s '.tmo 2:0°w 3B'A 21L% r•a4. ,., j9 Houu9,Dr,A' 2,403 1. 7rd i.(1"Y, O -S 2-0-A 11) '.4% 12'x Moban. Rck.,Anau bcomo milia aaz4U 1.YX 12% 13p% li% r.4, 3VA x,42.0 15+1,¢37 1.714 - 1.5% D.: -A tg 11-K Ilnrt-pi inu,i" 5.1% 9.7'4 911% 7.9% 9214 sx 5.S% 5-a PROPERTY AND POPIT7L[Q RESEARCH NC)RTH AMP -RICA 27 Res 14-45 Exhibit i� Market FwridarnentaF5 SUPPLY, DEMAND, AND VACANCY TRENDS Hisiodcaland Forecasl5umrnaryr Ir Midarical Pc.lk and Trough Nlslorlcalk Volatility Peak Perbd 3� w Plf[ed Dallas - F4+t 10 Feb 1 Pg0a A Worth vrmncy *4 IR4''� 1sArU 53�;, <^li's!j9 rdY"..u.fiky RAP 3$ urmy 13m. nd[)Mnuell 46DW- IRot,:CrAO +Ck nmv4bbFly Rpm 2;11 4}�no 5upp[V 100numn 54,Vt' 149= - 1986 GCnaWGpl 674 NatQmnan Quarterly Supply, Demand. and Vacancy . Imo : I— "...I Aa .0 111010 L}.FIIp,Yl �T1y'f—+„m.Lyf Averaya Annus#' Qomh Rams HeAmnrml F'uec" Mklrn PFR3a mail m. FPR54 9'v. L' f 1%14 a- ti Supply, Demand, and Vacancy Stalistics Fiundamerdals Overviews Say "adios' to further v2caney compression. BLA dash throw a pity party for apartment owners Jrkst yet Frndamevrtars remain ext eptromalfy healthy, and t#+e vac-Bmy rata Ie at it by&vst point in ovm a decade. The Cka llar-Fwt Worth econaoray has undemgwie %on* of the Worsgett jab graMh In RW country. and finding a dmr l6 aparttwl on the rental marked has lame ,nefeAvilgty dliPcurt for tenant Hoyheyer, than won't be the case for ten much longer. Tike amount 13f apartment constn crfice rs grawing to Texas - sued proportions, giving lamik3rds na asan to be anxious Over 16FOW Mann cairn on line in 2613, and nearly 19,W0 more are an the way this year, which would triple 2D12's output Forburtate#y, demirid in this fest-growth rrretro sWu$d be able to fill most of the ire Wy camlatructAd wrift WhAe vacancies wll nq4 over the forast;*t, lttey art proigz-bad to -Dasa in below Doll Fort Vlirxth's 10 -year arvera�v 08.2% PROKATY AND FORMLt4 AESEARCH !NORTH AMP -AICA N Res 14-45 Exhibit Mnuatl Tr9nds 3019 3021 2912 2V13 mia .3915 2910 391r 2919 Ch.ng. n 5 uppl,- 1 ,85E E a,2BB le 1 � 10.8-= IE 1R7 14 376 1 Ff. ? Xw Ch�ngw n rjr..r...e.¢' 14OU '11'w 1$20 17INII 1 t,na. 11 R7's 11 5"L 'n r. d., 7 7:14 v.5pncy ate, 1(31) $.9 }b $,B'% 5T% 5.9u RAz: 'at 5F. Gwrrmrly Trands 2012G4 201391 0917 C2 2013117 p1304 201401 201St}]. 29140 3 30.74032 Change ,n 54,pprp" 2OcIr T--74 S -s]3 7.960 = 333 i5§G 2,26rr, 4.926 Ch.r.4. " rj...Tw r JI'm 9 7:i5 5 :` ? ;' ea is 3.993 'i 5-44.r�r. 2,627- 2.005 ..r.nry 90.. 57K 5.-k c.. � 2r. 5.9'k rv`+- 5i}r.4 B. tl °+F 63 Fiundamerdals Overviews Say "adios' to further v2caney compression. BLA dash throw a pity party for apartment owners Jrkst yet Frndamevrtars remain ext eptromalfy healthy, and t#+e vac-Bmy rata Ie at it by&vst point in ovm a decade. The Cka llar-Fwt Worth econaoray has undemgwie %on* of the Worsgett jab graMh In RW country. and finding a dmr l6 aparttwl on the rental marked has lame ,nefeAvilgty dliPcurt for tenant Hoyheyer, than won't be the case for ten much longer. Tike amount 13f apartment constn crfice rs grawing to Texas - sued proportions, giving lamik3rds na asan to be anxious Over 16FOW Mann cairn on line in 2613, and nearly 19,W0 more are an the way this year, which would triple 2D12's output Forburtate#y, demirid in this fest-growth rrretro sWu$d be able to fill most of the ire Wy camlatructAd wrift WhAe vacancies wll nq4 over the forast;*t, lttey art proigz-bad to -Dasa in below Doll Fort Vlirxth's 10 -year arvera�v 08.2% PROKATY AND FORMLt4 AESEARCH !NORTH AMP -AICA N Res 14-45 Exhibit i� Market Dallas - F9rt JOFalb, I Page 5 FwridarnentaFe Worth 2,014 Nmard Trends Arparirnent demand in the Sig D lis white hflk but expect it to cool riff over the forecast A�partrnent demand oas averaged '14,DX unft ovor the p? t throo years, driving 0,W of "Stu psf -i�partrneril rocowencs in [he kaon W011C demand thovild mesio ktr over rhe forecast there are seasons W expect rt to slow. Chief among them: Renta we pricey. Average asking renta are nearly tO% above pre"recew4tn towels; r;aUzwrg rn3,ny Whbnrs k� weigh alternative opli ws Carpo the riI;4uoly low home primes, rranyr remlem my tarn do tire single-family housuag rrararet, and +With horror sa" steadily nsing, it seems that many sireardy have Int a metro with such e healthy evcnonry, the for -sale flouring market will continue to pick, off ind--duels oro vemuld prefer to vwn rather than rant at the want! price The silver lining is That even tluaugh demand may drop off same, It wldl sail be X11 alxnve the PPR54 &oerage In additiom to a string employment nutkmk, the D] IFW matro wHl have no shootago of psople movtng Irmo town, tiuhlch win contlnue to bolaW the rental penal. The metroplex is currently growing at twice the rate of the PPR64 and continues to set reccirds for ilii-migra4ran. New reGsAeals are far les likely to €cmmrt to purchasing a home bekwe they know what neighborhood or suburb they tike most, YAOCh leans many to rent inSteM of Wy. Additionally, the demographics of pee lnmm.rg pu puUliorr fit line great ranter oohort According to a study conducted by Forlces.corR the metuplex ranked as the sixth -least city for young professionals, one at three Texas rrrokf In 114e tap t{I lir. *turfy rtrra Red an rnotroar Mth ovet 5nc m,i'lksn pboplc and ow ed a raumbv of la"s inClvdhV oft( obIlty, good fob prefects, larger -than -average incomes, and karge alumni baser. from prestigious ranrversilms Add in the large namaber of Fortuna 5GO curnpankis based in Dallas and the pmitiae employment forest, and D-FVY rises to the, 1cp of the list By 2-018. this segment of the population {those bets ween the ages of 20-3) is projamd to growamfter g%, oanidng in the tap 10 cf the PPRU Q-FVTf; northern sabuM etre ih 11" milir"'s grorwM path, ulatlnn has lacamed in areas We Fano. Frieco, Allen, and McKinney ;as depots bythe surge in apartimenko web5prrehn lollared clr&ely py retaA prof j- Por the past ModeoWes thf a have been to -'Ie of the fastest -graining cities m the country (Frism awes the fastest -grouting city cram 2000-39). and many pubieartinne hka Forbes rate these as sohke of the best places to live lin Amer". The sheer rafter of people bokmg to move mita these r;rlres and towns should keep demand strong in this region of the ntetmpfex. Furthermore, if the economy continues to grown and local aatrnpanies ,With large pros&nm!5 qP. si, F'rho Lay, etc.p ramp uta Ihinog, =Tc ppssubW rK■vdaars will be added to pec local population Supply Trends CXevetapera are showing no signs of stowing. eveh Mh the sagrtfircant ramp up lin oonstiuclion nwear the parse year, rrrare units are expected to came on line this year. Many of these praects are located in denser. more sorban parts of the metro. As a result, North D,Ilas iaas boon tho submarket of cholraa for dovckipcm w1h nearly 5,00 unit sdricudulad to conic to rnarW this year, arvon aAtm 6.004 unite deWered last year But, there's actually stbatantal Dortstrucelon going ort in sub wince a subnmKet3, Inc. DentunrLa wnwile and Ar1ngtonfl 4&ki% are prgecbed lo recewe € ver 2-504 units this year. Over the fmacast expecttbe suburban submarkets too garner a targer shame of overall mnstruclion as the bast urban sites have already been pied aver With vacancies as tight as ttaay are. developers wall build themselves r;igy And w1h the best sites already spoken for, many developers xdi end up guing tea the outer suburbs to do so The milt development cycle will have an Inerwaased focus an tlrarnislt-orFaniod A"111crpment. The continued expansion of the DART Rase and other public io Darla" rt'dybrth ri% $tyrufred thug Interestof hinny develepem whioare "king to take advantage of infill locations near neer rail' sta+ay..m. The U.S. Department of Housing aad Urbria 132valopment ararsrded the City of Dallas a 52 25 rnftn gaant to acquire and plan urban neighborhoods near four DART ItgtH rail statons Locations along the Green Line and the Orange Line are the mos likely targets for future TOD. Developers are takang advantage of transit systems outside rad DMT as +.roll. HuflineS Comrnundlos wrnpleW con0ruct1pn riot first phase of Its WX million I-Icbrrarr 171 Stalxn, a 9@ -awe, nixed -used residential developrnew in Lewrrsville in early 2411, and is 234 ursts hme been Steadily occupied in the high g0A range Huffrnes has already begun construction an the second p#rarse, which aadudes 444 unit& and is expected to be vornpleted by late summer 2014. The tlieraslopment 'nil be the lhrgasl TOD prt24Ct In NorM Texas (pbftned for over t,7M LrAm i) and r5 heat across Morn the Denten County Transit Authority s new Hebron rayl and bus sWon, one of free star% on the cornmuM Ilio that will provide access to downtown Dallas. . PROPERTY AND FORMI-10 RESEARCH NORTH AMMICA 29 Res 14-45 Exhibit iN Market Dallas - FQgt 10 Fab I Page 6 Fundamental`s Worth 2,014 Muiltllamlltf Permits F nm 114M RENT TRENDS Rent $tatilstks Annual Trends 2119 2471 2412 2917 2974 2411 -me 2mr A74 Rem. Crmnrtll'wfQV C13 1.,15 32'X '_9Y 1;% 01 rA 0.9A U7% 0.3% Ashkag R-ol $omme3: r M! :f1A SM5.51 $9,756 S&W 44 $4614 1) W, 9S 5-1 # 72 SRI 74`a Effisri"'Iera $774"1 7r. 4g MOM MI 5115 565577 2,� 585+>i'99 SHA2+r9 Qtmrtr 7tiAnds 2Dw& MiM 201=2 141547 29774r1 Mi6T 2011402 26144:1 20141W . Hem C+a-Ile";; i 42% !:3`5 ].1'% -<. !G" a.41% 31% 29'4 7.1°% 747, Atk:sy Rant W4s 31 EESS13 1083.77 387'es S87755 $993:58 PBa34 SO- i2 $824.sc pfficuw rtrlY B19Es sfi2r.. cF $237.81 SS4S 67 QBE- 23 $957 ] -1 -285 8d USE. 913 $859.;'9 relitTt+ ods LandWds Should look to SgttSQao In these rent gains whit* they SbIl Citi, Even though asking rent grovAh in Dallas Fort Worth rs pri�jected to i+e bek3w average over the frve.y sae fareomt, tf ere is still a uti» of oppwwniV Pesr IsndlCrds to p.ah rei1ets. Oeslprtld the onst2ugtrt of supply that will hit the market arts ylemr, vacancies remain near Wstoric lows Wth desiratale, enypay apartments hard tf corm 4y corrcessons hovo kx a cut to the bone. a ranly tar a de r irmridly malrkel like Gallas -Fort Worth Howm lr, as the nuKrher of dekweraee, rrcruet oyeT the forecast, teaanntiiLiving olmoes wl7 inrreasa, and rent grorkth will ineritabty skew, lent grolAth %hould act he!!crrr the PPR51 a rrage Arid UT410rd$ will likely have tq bring back crw:tsaion parka s 0 draw Ire new tenants Not all Class A tenants are made of money_ An addrtmnal risk to the rent toreaast Is that rents ate already so es}iensve t2raattwsants may QIRS4 taack, resulting in a IGss of occupancy. This is especcally true at the higher, Class A price paints. where landivrds heve cnlgyrd svhsiantol rcr6 goinS over the post tow yews Average Glass A rents now retro Man 22% GT meXIiAh lsau$*hold irtcorrllis, Mersas at the height of the est cycle. this iaUo we:s less tharr 21%. Y4h4e rt may not stern like a big diffasranee, A may spur ienlers gowarrra Nmeomership If they view It as a mare adigte9able allerr atrve The taet'dtsi net apartrhent Construx3lan hrthrrg the markettoda:V is Mass A.will make pushing rents of high-end apartments that much more maliarrging. .. . PROPFATi" AND Pt]RTPOLl4 RESEARCH NORTH AMMICA =+,r. I.t-r 30 Res 14-45 Exhibit - E 4f RENT TRENDS Rent $tatilstks Annual Trends 2119 2471 2412 2917 2974 2411 -me 2mr A74 Rem. Crmnrtll'wfQV C13 1.,15 32'X '_9Y 1;% 01 rA 0.9A U7% 0.3% Ashkag R-ol $omme3: r M! :f1A SM5.51 $9,756 S&W 44 $4614 1) W, 9S 5-1 # 72 SRI 74`a Effisri"'Iera $774"1 7r. 4g MOM MI 5115 565577 2,� 585+>i'99 SHA2+r9 Qtmrtr 7tiAnds 2Dw& MiM 201=2 141547 29774r1 Mi6T 2011402 26144:1 20141W . Hem C+a-Ile";; i 42% !:3`5 ].1'% -<. !G" a.41% 31% 29'4 7.1°% 747, Atk:sy Rant W4s 31 EESS13 1083.77 387'es S87755 $993:58 PBa34 SO- i2 $824.sc pfficuw rtrlY B19Es sfi2r.. cF $237.81 SS4S 67 QBE- 23 $957 ] -1 -285 8d USE. 913 $859.;'9 relitTt+ ods LandWds Should look to SgttSQao In these rent gains whit* they SbIl Citi, Even though asking rent grovAh in Dallas Fort Worth rs pri�jected to i+e bek3w average over the frve.y sae fareomt, tf ere is still a uti» of oppwwniV Pesr IsndlCrds to p.ah rei1ets. Oeslprtld the onst2ugtrt of supply that will hit the market arts ylemr, vacancies remain near Wstoric lows Wth desiratale, enypay apartments hard tf corm 4y corrcessons hovo kx a cut to the bone. a ranly tar a de r irmridly malrkel like Gallas -Fort Worth Howm lr, as the nuKrher of dekweraee, rrcruet oyeT the forecast, teaanntiiLiving olmoes wl7 inrreasa, and rent grorkth will ineritabty skew, lent grolAth %hould act he!!crrr the PPR51 a rrage Arid UT410rd$ will likely have tq bring back crw:tsaion parka s 0 draw Ire new tenants Not all Class A tenants are made of money_ An addrtmnal risk to the rent toreaast Is that rents ate already so es}iensve t2raattwsants may QIRS4 taack, resulting in a IGss of occupancy. This is especcally true at the higher, Class A price paints. where landivrds heve cnlgyrd svhsiantol rcr6 goinS over the post tow yews Average Glass A rents now retro Man 22% GT meXIiAh lsau$*hold irtcorrllis, Mersas at the height of the est cycle. this iaUo we:s less tharr 21%. Y4h4e rt may not stern like a big diffasranee, A may spur ienlers gowarrra Nmeomership If they view It as a mare adigte9able allerr atrve The taet'dtsi net apartrhent Construx3lan hrthrrg the markettoda:V is Mass A.will make pushing rents of high-end apartments that much more maliarrging. .. . PROPFATi" AND Pt]RTPOLl4 RESEARCH NORTH AMMICA =+,r. I.t-r 30 Res 14-45 Exhibit Market FundamentaF5 average Reni 0 rowl hYea r-Over•Yea r DaU3s - )=4+t 110 Falx I Page 7 Worth 2014 — R+F'hM{q�q liml — 112=1 Aim pw — Fm,- 10-f"f k1 1W ZM Mn -R11 axe nbb 11r, :arid 117 2M aQ� MD Mll ZUI Ze 20rk "i S9a MAT INVESTMENT TRENDS Sales Transactions Slatlsllos AnnujO PROPFATY AND Pt]RT1x9L[4 PESEARC.H NORTH AMP -AICA =per. I.1 F 31 Res 14-45 Exhibit 2205 no 22@7 ?A44t 2000 2010' ml 3212 101$ Vokam i'Mllano 1'..362 4 131,W2 Si 244.: 51.915 ° 3±01 - V. CH CV. 9 51,89e i 32.9113.8 R11dw%Cap Bata E;5 96 9.3'A 79% m % 7,9'4. 1A'ik. 6.6 % 7 6'k 6.3 MaFf�pli k6t S;a5.132 537.973 Ss9..9m $11-812$30-957 Sal.912 531."4 ;,m$63350,953 11000-G10DUnt*4mrd'arvpicwMJn9 3%.206 M.750 584.1@50 311.247 300.+15 394.010 391.703 310.m 3102.96 1800.&Of@UntzMedan 551.000 $51..dR7 "50°1.2015 39957+ 3115.000 5901.050 959.450 513304.9 5^0 071 11999 &i00 U1nbt Mad" Pdca[Fnl Sm 087 3 .5144 32& e-3 531.W4 329,333 525,331 SL,735 535.,735 IS & -a R9UUnts kladnn Pdc&KkA 537,6129 334 a+ze 331412 mom 3-'a 792 519.435 SISR33 $7AZ31 127.03 QuanwIV 2011114 2112125 21222= 2442W 2011942 201471 Him 1222799 Dim YOU—.1+7-55 $531.5 $202.7 1572.5 SK9217 5303.0 W.,2 PA31 1;017.6 35359 M1dua Cap R78a 28'A 76% 7.B% 7.�1 °£ 7.0% 9.9% 9.3'A 6.7';1'1 70% 110 rrk?dmUrml 5]9773 533,907 5+10 Ha3 54-9 322 559,699 %4,177 35-0,513 599491 559,331 I 399t & 979U11st M&ddd NLhUai. 579545. jB3.928 51194ee 21039353 §97,569 SES 426 5104,2157 V88330 591 IM9 11000+& 5100 tlntq Medan 11d"41alt W 625 5-4 09+6 5111.254 S 0& 071 501910& INU1nt%+MedanNca'4hn 5'12 36 532823 550,001 1X%5 $29.1205 W.001 3311.276 510.455 540.525 ?I%W & {100 Vnts Mader Pncr,Llnt 517.477 520.D]5 $24- 31 S� t&o 526.040 5 1.120 551.539 51y,604 Sj0.29n PROPFATY AND Pt]RT1x9L[4 PESEARC.H NORTH AMP -AICA =per. I.1 F 31 Res 14-45 Exhibit i� Market Fundarnen,tafe H Is117rical Annual VcAume and Prlcel On It a4T�1 3:131 a Invastlnenl Tmnds 17 rm wirlA SMUD MUD surra 87 DalFa!5 - )=91t 10 Feb I Page °. Worth 12,014 Recent Ottartedy Volume and PfleeAlnk =%eA malrwra—M91Mril03l-h# PAII'' BrASTA tel? � � 3 #31,Yt1 47}aiL Sh' rLR�S E81r.75:1 4i1@ � S73r7LU tnvestots are gobbling up apartments left and ngilt When lnwentors started geltng prrced nut of cone coastal metros such as New York and So Tr rrancisccx they began w seek opportunrlies in seoonda7y markets like Dallas -Fart 1111or1h. Intrigued by the rapid lundarner0als recovery and lorrg.terrn demand drivers mveorwa leave be" deWying rewrd levels of rapal Inla1 the rnetrr:OILr: In fact, transadlbn +rcllurrar sn the markci has cxc:r-.deer! x,1.7 I„mLun foe fhYet tbnatcull4t yt-am and fore Ihn post NYO Vtars, ham surpassed the 2007 peak. Fhaa as mostly thanks to some b,g portf6ko deals buyers include Marguam North Arwimn Realdentaal -n 13= end f6leseone Apartments in 13101) and individual sales Wth same hefty prime tags - The best urban assets have been puked aver I or aren't for sale anyrin ora]- Ferny In the cycle, moMt cd tate aftention was focused an the North Dallas S bmarkert. ihankB to its central xadon aI d abunaanC9 of amanilb9a 1n fact in 2012 the isubmawefs trdnsaGtixm m6aiily doubled aha sates "lume of the held hghmd rut-v—.arket In 2Q13, lr*W"r, both P1*wIO`Al*n±MC(inr6ry ($A74 nnillim) and Denton.k.eshisvlae (S45O million) surpassed North Dallas dotal volume (9,5W million) es of January. Investors Icolong to buy the best uFban asserts in the mertroolkox halm hadto. pony up. Selena of last years pricissit deals (on a pax -unit batsis) woere in North Dallas, inducting the sale of the Rienzi st Turtle Creek- Mich sold for more than SKO.[1Munitl The asset was!D4% occupied at the time of sale. Suburban assets aren't cheap either- Significaht mvestr]f irltwerA hes driven up priDrtp In suburban lombons. tno. The 181-unt Heritage at Lakeside (Piano+Allenafalct+Cia ney) sold for a Mopping 3993,GJund, one the richest price per pculod of any trade In U-te metroplexLast year. the apartme-M was built in 2]171 in other major suburban OmIs Stcme"e (Worth Feat Warth) and C*klnml Reserve Q Fnsco3rdges{DentoluLewe.'illej sold farSl%.00afunitand3i#i,LDYtariltrespecd;ef These prices are tertanlydra%ing C1,9" tso jar sltatej rGpl;I'VrMnt Et. explai&ialg why One-te is so much nnullifadwlf consOuction h4ppaning thrpai "out Vw math iex Recent Tmn cli$ns C" Year ttdl sufflWAA111 Gln Pltfle 0111ft] P*Oura tilaflt teller lime fr" Sala'-Aco EdaLcs FaerKJAJknWKnn" 21-A.0—'3 5:6.1799,990 w 5.`27..737 3A! A1Ls Raaf ECLin P"arm VLrLi Inwa.mu^ss (litiw ictal 1 led tl a n a rI Cro;=F:'ea'.kM UP* Fon 41kre1 I1-SwU 9E4,472.59Q 160.. €=44.t3B 2= CAT Gapnelhrll m ("n"k vwn rGa F[ 4�I•.Perne Ranch I:Pr rrroj rPhcriPoj curs. en C+ Flenowhn"cKnncy 13-Nar•1335&,919,600 A34 SQ0.75r3 169e' MLdowal Propaleaa Ochre rrooK lL3 W rvoD j (PMDUI u Coma at Fry 11Pw vL"%"v ea MNa IS $51,309,600 134 $84,435 7'942 AMOFkan Camp.' Tmunarinrel C.,apr/aa S#aat Cvrmvllkrea, Ms (Autiahs) (p13§'orl Bele Meana eI 4nfmlLew wwpg 01-CVF 13 56t.490,000 614 663.962 Mt dock Irrama Fund i41 Y'da"M o 4r,"r.ien LWbLvm%%0e (Pubk• !rkYnlCl The idvu Gaks [Khar a9.011111 541,432,M] lea $230,178 cZM AINrs Risr!InhaIL18A rransearllmarral RIN24 Aprtmdntl, fF►NHaI Irrrardm, InL ;Purak) aiaschtanaAwae OAAg10snw.LieL 25.8av,l3 f40,CQJ1,09A 3411 $119,279 2M2 9IMICadlacai,>ew AH&nLliRokAin0r thowbonell [.ampeng IPrrvNer ThaDomaine PlenaJ'AWnNi:Kalney 13.3ep15 SM500.00 274 042.5h3 Iml Inlend Praek';" CORE Qahairrresxrs 4[iGael lar. I;Ialdklflorlall i;h�R.:bmneU SI Mimi L-dnf 18-N&LI3 337,82&,718 gn 592-390 1599 WDaaal Plapdtam O.Mid RaO&lias r Oymml Aptlm.tin rr4a:.UI Muldaagperk l}wAwm l.inmc iia 13 -swill '{196,i6Aiiwa SII 6122;!57 2M Inland frame Capkal (9RE CSahnl k.vam A,Pwbrneirts - - CorEmreUaa ilnsidrhionell firms!"onell PROKATY AND FORTPOLtf7 PZSEARCH NC)RTH AMMICA 32 Res 14-45 Exhibit ipr Market FundamentaFe HOUSING TRENDS 81ng6Fam4 Ple mlts Da1l3s - FQgt 110 Falx I Page 9 Worth 2014 Home Price lrwkx (Base Year: 1993) —.". — L 9 S Singh -Family blousing Staitistk* PROPERTY AND P+]RtVbL[Q RESEARCH uft4 44. qxrlwgvmmq) w wwrw -01.140 5104.494 116% 47 =455 541.95? 12% lift 3$ 35 654% NC)RTH AMP -AICA 33 Res 14-45 Exhibit "C4w'"plis i T** -A w OUVOM Ma6?ft`rFHunnP cs $143749 51Woj7 132.4 m*4w-FkwwhoM 3:59..154 549231 1.7% 1FFH7`0PlicaOH Ihrwo * 51 2.7 Homo Dwr w;Mp Rata a13% PROPERTY AND P+]RtVbL[Q RESEARCH uft4 44. qxrlwgvmmq) w wwrw -01.140 5104.494 116% 47 =455 541.95? 12% lift 3$ 35 654% NC)RTH AMP -AICA 33 Res 14-45 Exhibit Jill Market Dallas - F4+t 10 FaI4 � Page 1Fa FGridarnentaE5 Worth 20'-7 SUPPLY, DEMAND, AND OCCUPANC. ��3�h11DS O"kip nc1y $AimmaTy Hotel occupand0s cornMuc to trend +gyp above hlsWrlcaf averages. [)Gcupawic* are idtwt oti par ,with 2005 peak l rmis (94912). ;1" W13 Cnntirlue to trd+nd uta mer the nttxt few p*Rrs to �idddidn. *uppiy-side ormrm is rerr,aiin in effect TimID rnet+opWx rx [x11 paor b7 ade moretton t,7W Lmas this yeac up dramatically orrar 2419 deliveries. These addibans wi rank 6 -PN a6 one of the busiest metres Irl tPr PPR54 br Niel eonsttucton This rr-ar Supply, Demand, and NCUpaney Statistic Annual TTendq 20ie nit NO M3 2M1 MS 2010 2101? Cttmenc'�Aca-n! 4336 5.11x1! 2deg 3.a2u 1M I.'�Y5 I.16 1.255 Ile6 suo'o MOMMI 19% 1.0SO 991 43.7 1.� A Z-.99 2.641 3.0za 1040 re VLRWQ;acl 5E G!4 sat, SC. SOR-A1 133 aIe fisI% EE 44 ES". 5L 6:3!b 644% Supply, Demand, and Mxuparicy Year -to -Year 1 r MD M 3337=1 70 201 711171 3W - :irk 7tW 3411 3M 7[111 211+1 src, 3M 7417 3"Ab 0% MOKATY AND NATP9Ltf7 AE5EAlkCH NC)RTH AMMICA = o, P. I.t-r 34 Res 14-45 Exhibit Market FuridarnentaFs MR I Leisure & Hos pita lily Employment Grcoth Year -Over -Yeast' M/o ffSdX Dat13s - FQgt 110 Falx I Page 11 Worth 2014 Rai = 3511 ZIT = Ud = M XT 2", '—'"; Mn Mil 77n ZX3 339 Z15 am Zfff MIX% RevPAR and Room Rate Tmrlds AQti !pivwth Is picki ng u p ttr,opLice A.fte1r slo%Mng in 2-012• grog +..h has: picked tap ower the last year and For the first trine, ADR g ra kh is actually ouUmcing tpe PPR54 average. This trend well likely ctrntintm tough,he forecast (alkpw barely) uttimar6arty boosting Rev PAR as more business trmelers return to Cr-FVV. However, the best grcr,�h vrill corre In the dear -Germ as the supply side pressures Mush ucctrpant t4 belawthuir hworical;.3 mage* 'Room Rate and ReuPAR nrowlh Rate Year -Ower -Year — 147'7^.Ira.{w - - k km FR &J% �U% J,,, 151' - UN ;11)n XEI .7#41 aim ±rLN} ;{rn' 1.• PROPERTY AND POPM)1-1.0 RESEARCH NC)RTH AMP -AICA eta r I-tF 35 Res 14-45 Exhibit L E -v M -!—A.11! I—Id M 0%17}.aS&&M — VVF---� ^ 4A!I! LI 1,1„ 1 Supply, Demand, and Vacancy Stallstics Market DaII355 - FQqt 10 Rib 1 A,rqmuW Trendis Fundarnentali5 Worth 211162"] 3W 2013 20A Z115 SUPPLY, DEMAND, AND VACANCY TRENDS I Z 1 (nZ 291 R H islorical a nd Forecasi S u mirnary ges 991 2.171 Widarical Pc.1k wed Trough Ir HislorIcM Volatility ,4vsrwjcA"uzJ&om4hRaI&s S aria Z447 tow, wZft* AmlrzaF�ec" d.455 Freak F*riod Trwp Pfd 4%"t 4� MS" PFRU Medra FFRU vpmnqy R'fe* $qpoy Ym-fiky IQ,O % 3= 'I � : E P -�- U.. .'P�mnu NE�7 (8- 1 ;11 D"wnqwPkfiI,Iy-I?F z.. ;7r � E IA N. 5uppLy jAnnunri 26.I99l 1995 C.", Z*5 GWRIM011 07E 79.0% C Q {quarterly Supply, Demand. and Vacancy L E -v M -!—A.11! I—Id M 0%17}.aS&&M — VVF---� ^ 4A!I! LI 1,1„ 1 Supply, Demand, and Vacancy Stallstics A,rqmuW Trendis 211162"] 3W 2013 20A Z115 2WID Z 1 (nZ 291 R R�) 77 ges 991 2.171 S-117.1 -S oc", C Gia S aria Z447 tow, wZft* d.455 4.50 4%"t 4� --% fiso 3 574 ;L� r1;17 175% IQ,O % 15,9% 1 441% IA 0% .1 . 1 "1 14 7 1"': i. 5,1AIr FAe.Od 11.13% 79.0% faA W 1,5.1 74 3 Sime Ridad 1813% 813% 54.D % T7.954 lzo% I a 2 FAU Mead 16.9 % 1015% Is.? % ISS % CKurraly -'(Ends 2011244 291301 201102 201= 214=4 201"al 291402 M1407 vim lod t.:"+:6 .12 *A 023 ij" I Chanija in DWTLEnd' 0":' 'm ?. t.i se 1,128 1.144 `.149 1,12EV munq Rate '4 �.7 't. a % �' 1419% 14i% 14.151% 14.9'% 14.0% 485 Wm FLIUd f(k4 % 16 19% is 5% 1 574 It I SI % I $sw RpImL 19.7% 3 7 % 130 133% r.I n 1%, 129% 1 Si 2 s4w R*KW 19%7 % t$.9% 19.9% 184% '139.% 1659E Fundamentals OvervIew With a m ou nang supply pipeline, tun da menials will wmpt to unwind_ Most of the rt*qnpw%'s MeW bEaSeS "Il CWI!hUL' w eat &"y at tre vacancy rate, but this in-rpraoement won't last far Tnurh longer Though trier are only a hsiqdfuf of pz-qjecm currently Ufflier Cons-truetaor., dew6opi1`!1 art Adilitly wkarhav�j b;� "Rutn n furoo As IR". furlhtt w*�nry wrtphMlon bey*rld thiv. yt;jr a5 unlikCy. W PROPFATY AND PORTPOLLO RESEARCH NORTH AMP -AICA EURC-Fl: 36 Res 14-45 Exhibit Market DaRlas - F4rE 10 Fahr � R'hrgc- 17 Fundarnerpta6 Worth 20'-1 all is not lost, vacancies should d: p below 1+4% this year, a lev4W riot reachedsince 2COD. Ewan with a plethora of new supply, added at we of the lastest tales wt the PPf454, the r u-0-aplex's strong derrland o3ulA xA will Mop the waramy rate below prerecession levefs through lire end of the fanecast Demand Trench R-chust rtemand rmmalnatha norm. Fr)t lbur straighl years, on" deeraarid In Dall'a.%-Fort Wont! has ln"c4wcd. lhankY to strong growth in offioe-using p3b rectors Moody'$ Analytics projects some of the strongest off ice ,using employment growth rn ttw country aver the Wocast at around 3%. These gas should ArnateIV translate into gains in office demand shat vwU persist through 2018. The level aoF the demand growth will he stglitly abiwe average relative to ttwe FPR,54 on percentage ternns, but keep 1n mind that mts Is a large artice marksl Far i:W noronal net wb*0r0W WW rank r1 the top f1ft 0 thtr PPR54. The leasing market is dorminated by 4 S S Star alrlce prgperties, dut 3 Star buliding9 are getting some leve too. Since -.V0 companies have taken advantage of cheap rents to ink affcrdatrla leases at the matroplex's n%oGt allmctiwe offim properties. Recent moor& -ins for 4 & 5 Star space ;ncludt FTS Intematiw al, which tsaok almost 4400,000 rF at 777 Main St In Fart ~W% QBD, USAA, wfich mooed into 25O,i07 SF in the Legacy Corporate Centre (Upper Tolhwey.Msst Piano); wW Stam Farm Irwrrarre has mowed moo attr4xt. 800,Wo in NClrlatr4 o'1d space, a 4 -lar' proWy In Rithsrdsgh. vA'rrdh wilt hi5wW "it Wploytes wrrlrl she+, 1.5 m1lion campus is €omptem. However, over the past year, national companies lila Kohl's. (230.000 9F), Bank of America 700,C00 SF}, and TcNwm Wass n (115,000 SF) have taken signdcant space rn 3 Star 5lriktings as vmq 'dft rents rrela wely imexpen:wa when compaTed to the metro's cher product 3 Star properties are lkelyr going to continue to get love :ram tenants - .. .' . Supply Trends mom oew dtvmapraent is or the build -Ito -stilt wrlidy, Wt sfaecula0lve construction rR $tarting to mar its had. CocWtut#lan finanON ho.% hv.e- imming rola the l5"t+tr:p141'# ItiF�tm4r# rtiraElR6#, bslt.�# tlq PiPr,.l:rur. cr;ailnud4 to fall, Icr °s FaPeVAMW V x, 44 tare office merkei. len, although build -lo -suet hes heec the norm over the pest Fexu years. cweelopers (end lenders,- are stalling to show a willingness to stint pfry,ects wutthqut afltt:dar tenants Roughly 4113% of what& eurrentty uWer c,cnratruliari i� spaeulxWe, ,1A5leh 1i impressive when considering State Farms 1.5 million SF regal NO under mristrucbaon in Rae#rardson. Cleealapers wilt Wild here -indl the 00As ccirrw crams, and with the job unatiun conlinuin!t to outperform the national avwa�m by a y0ide margin, more develop "=s will &tart putting shovels n the ground without teltants n bow Western [gallas SuWrbs possees the gr"% t risk to supply. One of the drivers of supply wll be the new DART Orange Line, rurifting from Dalla& out 1hfwgli Lis Colinas to the Dally ort Vftnh I. terr'aa'tiansl Airport. 7 he Greater Irving•L2s Cahnas UWenber of Gommefca estimates that there are gal acbye projects underway along ris path, totalN 53.8 billion in constructor corgi. To the west of the D;iIUsLC5D. West [Wlas trwc*tors has assembled QO acres Of land an wfrich it plans to construct 45 million OF of r*Werilial, rbtaf and ciffioe pnodud. The development, w0ch will be named Tcinity West, reportedly will he positioned as a distinct yet corriplamentery suWrorktrg to tufa Dolias COE) G1vert rna *0 trmdrlll , abnstrui;tl grl On rattly of Meg* project$ ha$ been statue, but 113 the *runaway improves and capital begins to flaw again,expecttosee plenty of shorefs pushing dot in Wlliast Daltm. RENT TRENDS Rent Shdi$tks AnMUM Hedy 10411 2o1 2012 2G1b 2tF11 2vri tdt.. torr Rem aswm i+wti Y -,- J d!N 1.4'% 11.9 `% _ u v , •.- � +� 11% A5111,19 Rant 519.92 519.71 519.97 $24.77 ._ __ 521 eE s__ a, 5_.`.&l $23--A 4 E..5 sr31 Rm.] 521.15 321 93 322 15 T,.23 27 3 Elm Roil 319 90 $111 El $19 91 544 92 iE,2Ytharkaeiad 11a.9itime 4°!r;i1 Oxrarlurly Trends 261244 ii07761 297391 1131393!. 291941 194rA1 29149ii 29U4a 23'lA414 Rmft CamM "Olt16'ti 0.3N 2.6% 3.'-% 4.01, 6!'k. 1-6 1- 31% 21% Arhi®9 R„PPi 11'.9 97 919.92 &V W $20W nor VA AA• $21.011 $21.22 521193 a&5;TWINA-Fd $2215 S22'.211 M00 S;1304 32327' 3BUFRberp Soo .01 5191}2 219'50 $1959 31992 1 L,7 SW RVed 119.415 516.4a 519 62 31607 37608 Ren(Trends D9n't expect rents t9 shins. With lire vacancy recovery well underway, landlords in the me1ropfex are happily growing rents again. Unfortunately, torecast rent grovth will undenAellm falling short of the PPR54 benchmark But there rs a silver lining 0ecause rents hardly fel I here during the dcronturn, aiwy ars already 1,% aboyea thi"r preretessian hos, well ahead 1X0 ffl ne In runt metros across the PROPFATY AND FORii4CaLlf7 PE5EARCH NORTH AMMICA 37 Res 14-45 Exhibit Market Dallas - FQgt 10 Fab � Page 1-t Fundamen:ta&5 Worth 2,014 counhy+. Just don't axped reft to under;�a a sieeable pop here IF Tents lake off, sipply will soon follow, stymeing any chance For sust7U+led growth POA M tint r'sr rant gryaWkh : could "3 Stir ptopiAl7ra. Even ltlougty both 3 and 4 t£ 5 Star -rated properties have recc uered alrrou 400 basica poirlls since their recessionary highs, 3 Star Fent growth continue to underWrfcxrrl its 4 $ 5 Star counterpen. Reintr, for 3 Star assess cuwerfdy cewrre out to roughly T8% of 4 & 5 Star rents, compared to an 02% average since 2000. Leases in 3 Star bushings try companion 5ke Rank gF America, Towns Watsol7. aril Kohl's, all of +nt' = leased ova 1 CO.0 00 SF •uvw the pact year, shculd continuo to eat array at the vacancy rate, w hk% should allow landlords tai Vart pushing renis At the same 11me, neer speculative supply will pepper the A 85 Star market, uldmawly slowing rantgwmh 1n that segment .. . Average Re Rt Grow4 h Ye"Vor-Yonr — W8 h. ,YA o7N1 I"f1FCAAW 1ji r13r1 ?m 2577 9331 Mr AIA = 244, MYMB 3M 3M 571, Sirs ZU JM MM 2315 2717 tilt, INVESTMENT TRENDS Sales Transactions Slaillstlos PROKATY AND FORTPOLt0 PZSFARCH !NORTH AMP -AICA = o, P. I.I-F Is Res 14-45 Exhibit Anrn3el 2005 no 21x7? Im 20A 2010 2011 2042 2013 `,•o.4,V.r,.a•:. S31311,9 83197 G S3-eE11.1 31-433? SaL£7 S063.3 313290 S1.ErE.0 32,939.7 ki.0 3rr,e;�;eA - 1A% 76% e.4 % a.21% 7r% @e% a.1 % 74% M..a-' 693 510E 1191 $1M $9a}$1110 3'lrr $rt7 $120 a IZ ; W 4K.10 6Feyen Pnr9PV'1 S>I.q` SI!, $124 5223 $$r 5129 110 $t:d f1'e5 1441Co k3edon Pnca':.. j 'ILI 5126 31{1 $:3 11.02 e. = _ray r_age! 'b54dan PAW -c R is E 89# 593 $E1 $55 $ e 896 $in Quart" 201tcm 8012171 1'61.X52 2411'07JN20# 20130.'1 111' WJA4 *0114 '. skim.{Vh7lnnb:� Sdrz.3 56: a C7.Y3 5:r061 531s1.fc 53u�` 54149 U251 57598 Medlwr 41.4e 9.0% d3% 0.01% 0.9'x. 4.9% s10'* 7a% 0.6% 73% Mebaelrnw!ajr1 699 $142 f9# 51:1 $116 $132 1123 9115 596 463 SLU Raid Wladtm. pMt&rgr 3® $106 57' $111 5166 +S1132 S205 5156 5204 3 Sim+ Ralad Madimn PAM6F R 3174 $149 $147 5124 $174 $145 Ski[' 5190 375 t 11Pew~ M W. $71 $217 5141 $113 557 SGS $104 PROKATY AND FORTPOLt0 PZSFARCH !NORTH AMP -AICA = o, P. I.I-F Is Res 14-45 Exhibit i� Market Fundarnental`5 H Islodcal Annual Volume and Prlce/SgR - •t xlA�rrAloel �r h+hdonma�.�rr 3 1m Ef17 WXM. EM 3rd T - .R1'n AUD ARD an AM Investment Trends 5r:S1 511 Dalia5 - )=4rt 10 Fab I ipa gc 15 Worth I2014 Recent Quaderly Volume and PrIcerqR 7?AII Leila 6-ta2 IFi?r riEr7 8117 f#r] 8ar SIM 87 The rnark€t is heating up. While the office markets In owe -coastal markets 3ke Bosun Neww'York, and San Francisca have been geding expensive ager the last few yeaas, irestit tonal investors have increa8ingty been Curr" to rheaper secondary markets in search of better pelm. Thra continued shot of capital trss drrven up pricing en the rnetropwic xfoeh is already alive the 2C111 6 -M average *4n-rything only a handful of TrwWm in the PPR�A can clalrn A fere retort sales which hayp traded slaatrily akwt their gren!- iun sale pnces, exemplify this trend. One exa n foe vias the sale of Premier Place for $513 million {S215i j, 1% hegher main its 20M sale price Also trading war, Park Center, which Granite PFotlerties sold to TA .Associates for 552 mrOion (5220 , or 2% higher than the (}75't*le prem At the metro's *teller ertmi}oft-' retoa*ty e6ilLinr.rtx4.. "peb# valrrrrte NO bbraiihue tt lmafei -, h&#ftve1 prioihy wil hktty Flatten out as inveatvrs deploy cep"I •n late -re we y, lass pricey rrrari em like Atlanta ans Phoenix, whane median prang has been falling steadily; since 2006 Value -add tnv*stwa from the past cyclo have bean cashing out. I ruestors wtso were able to hang on to theiw keys or those Ww could buy dxsLTo sed propeAss; during the receEsiwr have been finding 3 hisalihy markart for their noir well -leased properties One such example w ks the area -building Cobariade office park in Addison, w>ef7ich sold for 5205 million (SIP&SF), 21% abarve its sale price in 2008 of 5170 million (51 ti41'SF) However, the new price Is imderstandabb; in 2UQ8, the properkm were reportedly only C5% o=upied, compared to the most recent Bale. when they weFe over &5% occupied and tkad been renovated to vnprove energy efficiencies to achieve LEEQ SiKnm. Similarly, The Point at. Las Colinas traded for B55 million (5135fSF) waren rtues aver 98% xcupiedJ; therefore, t sold for moce than 36% more than it dim m "11 when it was only % biased In buildings over 50,000 SF that have sold, everage occvpanaes have been ria—, sowly but surely since the 2449 low Expert the trend to continue: for the next few years as investors look to ea$h out In favti' c}i :al. err secondary i %ark:Ms witty Cheap& prinnV. lnvrisWts continua to lccCrp up vallao-add desats on than oltG+ap to COD -Galas, They have gmerally shied away from C61D-Qallas dwe to Its high =stri4twral vaoai+er rxfes and its neves ua competilive rlffm pr*duct As a rewalt„ the few b*des here lead to be redeve4apmen✓i or value -add plays, as opposed tD the core oitice investments that are common for n -east other CBCs Recent sales Irrlude ttre 15 million 5F Cor»a dank. Tower, which wam acquired for 51513 million (SWM in a joint venture batmen WM Properties and C€tRE Global Irwestors and the 1 3 rnilllen SF Thafksgrvieig Tanner. bought back by the lender at auction for $58-5 million (5 4-' F) carlicr in the year and Ilse -n resold l0 VV*ods Capit31 Wiria�pernorat fpr $57 q rn79ion P2?5F) Andhera^xomplo 4% the San JaciiiW To%er; Cousins Properties tooght the 867,004 SF tosser out of foreclosure for 559 rmllion f.5138t8F) w1h :plans to make capital m>provemants and add amenities It was 69% leased attire time ort tha sale and was 82Y6 leased as of dNa third quarter , PROPFATv AND PORTPOLlf7 RESEARCH NC)RTH AMMICA 39 Res 14-45 Exhibit i� Market FundamentaF5 �M@Rnt Tr�lnaeclia�� PROPERTY AND PeRtVOLLQ RESEARCH DaII3s - F4+t Worth Ym 1 Mw 10 Falx I Page 16 2,014 199? Latslns Prapariime CrmLart Real EsU" an Egvtias LLG (Iral1itAcnall �1�i�IglLrfgrl rk111rw*ar Raalily IltMll *rkrt Pwrwsihrawiwall I'1iC~ 77761an RVfaMCEQ ix: -Sap. 13 5149,547.E[U 115COM 5'GIMC Thm Twwml CnMnl Eq"uwuy CepLmLk he. IlauhSel t.3%447 $'Wflp Chyplesa l-,isuma`t Clliwe Raahy Lrc9ht Vow' Carnpiry tml. h1r. (PublO I pvrike) 7'PtUrvrin Ultro 20 -Aug -l3 51XW.WC Dms591 Va9.iu Tcwars Cilllarilri7Vun Hinge 1. Pmwwi k,m, les tip - Sma it fit r Adhigh mfMansllald 1115fJm-13 W,491.3715 249.990 $274.29 L7pwamns Tamar Piadma JITka Rarhy Nauhw,riI— Muu,ol I.A. Truti Inr. lk"ie; Inuv,<+2�{:tr-Fxuy N r 11 Lincoln Pe4c Camnil €wpresswr{ C&Isar-1J 35 ,7S7.iCw2 275.m MUG 1Tea 4a ..al Las urhm V -A.9-13 S`35,GM" 492.127 $13&.77 Ccla.at CardprWrVan A1sS�MorkKs2a olgre("rowirdLiBJ 99 -4r1 -7'j ml.m.�i.C'- 260.m S204.29 1 Ed Leaealtla CiF" I Rlcharditan 05,54 13 350.717.!9[3 Lw.zm 5245.90 E595N Mahe as 4Rea CY/lraawi Lail 4E- 6a=-13 $49400.000 259,535 S'LE2.S Bwd E.1 ona Ma,,imtrur C"CD 4-,TVMA L43J 1`*N X13 721 5797.11 Rma BR PROPERTY AND PeRtVOLLQ RESEARCH DaII3s - F4+t Worth Ym 1 Mw 10 Falx I Page 16 2,014 199? Latslns Prapariime CrmLart Real EsU" Hi-mlpwaled+P UJL) Egvtias LLG (Iral1itAcnall 10M rk111rw*ar Raalily 04hhwwzyAiv0itRIGrr Pwrwsihrawiwall Corpato2gl **) 1-092 Par11Le°�aplal PgmwL CSRE GlLnig'wo mn Ir,:. IPuhlel L uftil••anen 1933 Aff"Lan Raa[y Captal CepLmLk he. IlauhSel fhhprruaa.. Int ;PLAA!5 1999 l-,isuma`t Clliwe Raahy Lrc9ht Vow' Carnpiry tml. h1r. (PublO I pvrike) ieR3 FwUL Frcpr7y 13=P, CBRE mood ilwasmra LLC7P41.1da5 [arseiL,aiunan lm Fibre vw;irera. S1c Hinge 1. Pmwwi k,m, les tip - mw -119y Arwnrrm Remy ::®pw CepLaase rc. Hu MSI PrcdDwuae. Int iPLdik5 1999 Piadma JITka Rarhy Nauhw,riI— Muu,ol I.A. Truti Inr. lk"ie; Inuv,<+2�{:tr-Fxuy fln�ctutlanerl I 99 to M1ncotal Esra-1Rel Cmka Gbm Fmparty Tran Asaak R3:.IC. ke. 1pubkCl 1P+Mrli+ NC)RTH AMP -AICA =pirI.f F m Res 14-45 Exhibit Market Dallas - FQqt 10 Feb I Piioa 17 Fwridarnental!5 Worth SUPPLY, DEMAND, AND VACANCY TRENDS I H isiorical a md Forecast S u m rnary 141%lacical Peak and rrndVh HNIbHC4 v"My 9w kv�nv Annual Q owth Ralms He Amlrza F�asl Re PeFkbd Trmlp pfd' W" PFRU Meoro PPR54 617 % ;C'. FX) .: -� 4. ?r.k?',O" ;..popw#hfiv, " R- 2 C pum-f I A Derwo (Annu .,I 3'494' "00 1065' 200 DemandVv*fty Rp&; 1d;. Cer+�an 5Lipp4V 100nuLF1 16.3 r2' 1985 1443' 203 Ua"2Wan 087 Net 139wane C Quarterly Supply. Demand.. and Vacancy -, — - MOKATY AND NAMLLO AESEAlkCH NC)RTH AMO ICA 41 Res 14-45 Exhibit i� Mlarltat Dal as - FQgt 10 Fab I Page 19 Furlydarinentals Worth 2'014 Supply, Demand, and 'Vacancy 5taltialks M....,, Changa,n.s„ I PiaY 2.o�r I'M � 2d 1' � �- - - 4359 - - 6 � 5.,9F3 ChanOa n avy",d" 7.Cea ZTN 4,7e6 4, -kM ism 4,i39p "All'is 3,959 VoonuyPv*(04) 9.0% 0'.2% #A% 716% 70% 7.3% 7.7% 1f.1% 9.5% 0ammur" Center tb.1 % 11�A % 13.7% 11-8 % aenraL riabfl 5.994 5.71 % 5.1 % 4596 PAM 6.4-5 5.774 534E 6.6% Nd'4* rfmnd rOfm t4.9% 14.9°.* 13:16 1219% Pw Ceabr 7.01% 9895 6;5 % 4.0% tpKwibCer4art.0% 1.8% 5,9% tb% "drip tarda. 13.d'!4 13:944 12.1% 11x9 % 200" *026C CHa Hu '., apply' 01 156 ;71 799 279 1,999 24� 1sT X73 Chen9e el Domre r,709 1,d11 t im 1.210 BST I M 1,092 1.106 MIX verancyRato 9A 1% 6.291 '.A% r.9% rib% re'% 7.49w 7.1% 710% CnmmurPtjCenmr 13:7% 12.1'5 117% 121% 11-8% aanaraL frafah 5.1% 4H% 47% 4a%L 4 44 PAW 5-991 5H 94 5ilfi $971 $571 #Jetd'bxhrod G;erdm 13.2% 13.3% 13.0'76 12.9% 126%- PmWeenter 9.391 9.2% 9.991 L.3% 4is% --pKib[ycarrier 6.a 4: 9.2% &0% 66% dio% a4LpCalfa+ 12194 11.994 ir.396 1t 2% 14.471 Furdwoldals Nerv'Iow R4Aall traoaneles conllnuce to inch i owriwa,rel, but not far much longer Although teat bulk of the neoveey is offer, inw+esfora can anticipate a bit mere Yacar" ccmpres fhraugh the early pad of 21115. A handful of prulvci* will deliver in the near Warm. but demand growth shaul d more than compensate for the addltionsf space beIrg added to the market. However, by and -2015, reew oorwaruclion will ev,entwally #dart pushing vaeancles up Ili:*1 eirpatt s>ccuppmcie3 to fall tots lar b44r3w , fKwmver, a4; the stellar p;lu a to job growth and n-n-agration should contnue to draw retailers to the metro x, keep4ig oxupsncres an lone with prereoesmon highs. N mann Tt>Qn6 C n@iumor spending it up, giving retallers mare confidence to grave. Given that Dellse-Forl'uWrIlh tzars one of he bast econorries In Sha cowngry.. Its. np 3tiari mse that wnswrhcr *pending nae slcalily +nr7r"s" In tact; 34113 s sales lax revenue was hip over 4% over the pireylotis year, signaling that North Texans are operbng up thear metiers again ElaeoAtere in the Rx-tro, retailers ranging trawl Walman to Big Lots to Goff Gaiaxy continue toles se more space. This bodes. xaelt far near-term demand, ask is forecast w excew 3.5 million square tiger annually Over the. rphCr.ant MrninAl dMano growth oil tank Q -FW ih the tri' fret of the PPF?54, and on a peacentage basis 0 will rank in the bap 15 Hewer is cooler and bigger 1s better In Dallas -fort Worth. Although all relat subtypes have enjoyed sorre vacancy convmnsion over the past year, each subtype's level of vacancy is mrnpcMrft tc nate. Community, neighbarhocd, and strip centers which teM to be smaller and alder retail assets, all have vacancy rates north of 1(Y%, accauntVV for mush of the me'tro's overall Yacancy. In corb-OA malls and paeAer centers, or the nevxn generation of retail in the metramplex, all enjoy far tealthier fundamentals. vrrtt9 vacancy rates beacm 0% Whin there era cerlamly "vMAions in each subtypex. landlords atter be cognizant that tenants rn C7 -FW pmft 10 be blared In. the best-reeased, moot-traffucked retail spots. and, as a resultdemand will typically flow to the newer retail properires After alt, In teas. new age of online shopping, wxrki any tenant choose the older. aff-the-beaten-path sh-p rrmd rover the new Irfestyle renter?Probably not Tins is ago mportant for investors Despite me metroplexs impresswe demographic audook, older strip rnaFis and naightorhoad cenbers mazy be too far gorse to recover, especially t they lack a major anchor. You can only put so mich lipstick, on a pig Supply Trends Retabl deliveries ..5re sialrting to ramp up In otic HId D. blit remain well short of past Is, The market added Imes Mann 15 million oP new retard sqhxc at 21]10, but ihat number Yell IiMily nvcteoze this year by rnwa than o enidrgrr 5F Hmwvcr, even Mh the add anal supply, tate market v". 1 be back to its 2000-13. average of just over 7 million SF. Netsalpply additions ;rere lessened thanks to IfrG eOnhnued deffinidon Cd Ob!p� retail &.pacer Over 1 million SF of r[eta11 spoct vyo s I empved from mm"trsry this ryask year, Ab ch is sbgh:ly rrore than average annual detrlolitxarm over the past decade MDving fdrward, the aurora's project list shcwfd contrioe to groan There is we sizable project under ounstnrotion and expected to deliver in 2015 that is hoping to plat The Colony. Texas, on the map hlebraskz Furniture Mart is building a stare and showroom that x40 hvua 19 milllan 51= of retail space. Tire deveiapment will employ 7.f7W peopaa wharf 4 i* linishad Antdpatc an outsized amount c1 supply to be cunarnlrataad akang the northern path of giowth in PPLOPERTr AND POPTt=r9LL4 P;P5EAlkC.w 11AgrH r4MEAWA I 42 Res 14-45 Exhibit Market Dallas - )=91t 10 Falo Page 1 r1 Fundamentals Worth :,l ' correnuniiies stxh as Denton and Frisco. Developers in this market hewe showmn a propensity to buid a hot, and build K qu-ckly. and it would Come 2Pr` little aurprae Ir 1hzs wer* le happen sgaln [tel lywyd ptoJ$ctt Wig Who NV iivoid. putiilAg addfit diN1 pre"Ura Construction of retail projects -has stopped in its trasks during the dowmturn. Da-las-Fort Viorlh was no exception. Some of these projecits1*13 the proposed 025'DIM SF 5brypark in A.irlg towi have been scrapped forever. But as the local ecmomic conditions continue in in -prove. cnrrbvucticm of cover delayed prajects. in the Trmtroplex a,- nt`tbng QoirV again. WestBend {350,CCO SF) rn Fb1't WMh saw contft0on donee to a halt in 2008, but the pTojed there restarted and a pented In tate 20133 €?gees prrlte'cts that have beet,, Indefinitely delayed are lean MutcwM (5:25,OM ) and the retail con-pDrierlt of the -- rityr Ruer Corridor project {400,OCC SFJ VAAB these projects don't pose an invnedtate ridk, they certernly,wuld a few yrs doom Me road, as developers are able is obtain finanorlg and fundamentals remain Imo. Retail Demand Drivers Moira RRRSA nwoanr Ifim* GU 1.111 t Yrwr-Ago GFW* F9 t1511rS-11 CuworK Y-war-Aqn Cram 11 Raw ri pb lmentglibw emv 333 7115 's C. •r, i U 0 l ; X 99 e,< Medan F6uwtiwd I:ccarra 49 193 w6.:31 i 156 47 V J. 6G.1 0- 2 - RENT TRENDS Rent1a116tiC5 Annual Trends Rola 71111 701T 7013 1014 2016al-A .2017 29t1 Rain Gru-th YON U.9 % 1 I % 4 5 74 4.2 ". 2V4 03 °4 00-; Ashrm Rmt 113.50 Sa3.41 57345 61340 $1420 314.70 S16,12 St 6.29 2116.25 Vrim un47Gentar #12.'11 $13.20 $73 e7 S12e6 am"ALPlwtan 31266 577.23 511.0 513.eo MMI 523 96 W 61 $2040 $2147 ale~oiyd wenlw S12:a4 St2.9U S12iU 57227 Powe, Ceptor #19.28 $111.66 S1a.0 =116 $pKIWtV GarAi" #7.30 67y.07 $11,40 Swim SLAP Curb& 314.20 314.46 514.47 $1434 4uartody. Trends 291%34 M$Ml 2131= 2912QOI 2013041 39JU i 201442 21Yt4Q3 20114Q4 Rail 4+aeth '!'CY 0.5 IV 011% .1.;..-. 0119 11'„ I,9 -A U% 39x..1,-,- A""aRmt $1146 $13.46 313!0 513A 11456 Sri .% $1383 314.02 1,14 210 Gomm"Lamar 398815 '31921 313,17 51344 512.95 G4naw RAW smils 11281 312.47 513.69 TAME! Mil S2A4@ IM41P $2438 527.31 521.47 Hn1p'te�slaud1;.. 611252 $4214 $12.45 #1,.93 91.2.2T Powe*C"ter 57069 319.0 3199'3 $1rs+.ir` #20.25 Spof%a Garner Sit4u 31137 31681 51-585 516.66 S ,o swrewl 5.1447 514.46 514.49 314.39 $14.34 Pent Trends Rent growth ts expected tri pwk tip Mam WAh the Fismam,41;ils rcimwory wmU wli;emrway and demand mpmoining **" landlards vAll finally have enough leverage to push through react gaiDs, in the near tern,. However, dant expect tits market to see ten rnwch rent gruoth over the course of the forecast. Supply and demand +pili quickly reach equikbriium, cauwig vacancies to reach a terminal rale ,.hal will 1i,. h ,hrr 1h.j- th" sv.ri:k'OL R3 0 r � uR, K wtli take- :1 ^ 2,lher 251.56 tis three y"r3 for r6rt13 to fetu 11 to prerft,&,&Skin 1-7'1 . !; PPLOPFAT1" AND NATPr9Ltf7 RE5EAlkCH NC)RTH AMMICA r iar. `.rt 43 Res 14-45 Exhibit Market FundarnentaF5 average Reni 0 rowl hYea r-Over•Yea r DaU3s - )=4+t 110 Falx I Page 2'0 Worth 2014 S'oLny ly..Ilinns; McRar--CMP R** Mean, pnw"grt Cwrd /+Nmr Mlaasn Nrea.rSgFl Mtl Mad.W P1UW&*1 Nai gib-wM1aod'nnm- Mialm pfieW EqR 11 �- Ciwar Ma.W.. P:'._ar3gR Cvnrtrurt?p ConlarMahrm PrnottiR 5'4rp'va� Madarz�lnce.��7GL Spa=laly Canim Macken PheASgR PP,CPMTY AND POPMLLO PE5EAlkCH RGI,IQ1 iE;$ S11k W 334 .:9'911 Mill a9197Ki9[. i*TXW 2W ZU 3M -I 3M2 3Mt3 MU ZM 33M 1X7 MVs S7077 INVESTMENT TRENDS sma 5547.4 5151.11 $13153 1M.7 $399.5 7.0% 79% 49% Sales Transactions Slatlslloa 7,794 7.89E 7.0% 79% 67% S'!3 5158 5119 5154 $212 $147 &M Arirrudt $214 #67 31H Sim SIN Sa33 SA4 2M 2M 2007 2M 2609 ma All Im 2D13 Vokirm l?MllonO Sd541 SB9.3 5931.7 Y.W,.O $371.9 54469 55:4.3 51.1550 53113.5 Ma6anCap RA14 7 9% 74% 7596 73% 50% 949E 79% 7.9% 73% Maim 411io 1 qFt S14d $17: 5155 5170 $179 $117 5117 SIA6 5186 G, ralpctsiy'MarfwnPtc'e•ygFl. SIN $lm $125 Sin $129 $136 Sill S16+ $156 Man Madirop p5inet84t 5279 $110 $366 $252 3606 513 $71 Sim &06 Mrghhrrhoad Cordae MadtmNciJSMR Siss S103 $171 5193 Sao SM Sias Si" 220 Po- CanterN edar. RMddSq Fl Stet S2:3 €244 5174 5.191 Si" 5176 5146 $iiia CwrrwrnSy Cama, Matirrn Prca1`3gF1 5144 S100 5239 Sm $140 342 $182 3W $151 `JC+,c+,.~Madi#-Pnrs.Sgrt 5185 $1:50 51A9 S125 $129 $76 $145 Si" 5197 upmtwty Cantor Mohan Pn�adugfi $279 S2d7 1196 37U S'oLny ly..Ilinns; McRar--CMP R** Mean, pnw"grt Cwrd /+Nmr Mlaasn Nrea.rSgFl Mtl Mad.W P1UW&*1 Nai gib-wM1aod'nnm- Mialm pfieW EqR 11 �- Ciwar Ma.W.. P:'._ar3gR Cvnrtrurt?p ConlarMahrm PrnottiR 5'4rp'va� Madarz�lnce.��7GL Spa=laly Canim Macken PheASgR PP,CPMTY AND POPMLLO PE5EAlkCH NC)RTH AMOUCA =pirI.! F Res 14-45 Exhibit RGI,IQ1 M2QT a9197Ki9[. i*TXW '291M 39!13111 MW WIM 25'►7MA 52074 S7077 5175..9 sma 5547.4 5151.11 $13153 1M.7 $399.5 7.0% 79% 49% 83% 7,794 7.89E 7.0% 79% 67% S'!3 5158 5119 5154 $212 $147 &M $174 $214 #67 31H Sim SIN Sa33 SA4 5167 $195 UR S71 5122 1159 5132 5294 $869 $.1819 547* 990 $135 9159 Sul 591 T,20B 5=9 5133 $4s3 $179 sig? $m $197 $2 $18* W" 5277 M2 31i9 See. M $162 $151 $102 5166 S$a #124 8146 son 5511 5252 5157 S12 5734 NC)RTH AMOUCA =pirI.! F Res 14-45 Exhibit i� Market FGndar nentai5 H Islorical Annual Volume and Price/SgR :� xlAr�rllAloe� � Nedfllf�lt]�+�L Skil $Tel SITE 7M SUM *7171 SEI S�z1 p Al I. .int ant 2TI? airs Sr Dallas - F4TE 10 Feb I Page 21 Worth 12,014 Recent Ouarterly Volume and PricWSgR Am %ft rdMw-�.n — MM< MRVgg:IY7 FAM, M W15 cis C;.b Ifio #15fL WWI I'm SIM R1� lnveslmenl Trends Beat aellaity has cooled doyen after a freneBc 2012 In 2612.. deal uciume excesded S1 billion for the lira there sine 2004. Things r erred a to .n 2415, with total volume cox n ZU% over the previous pear, even though wcA L.,Tnv topped 2007 Wei& Prong is sbM on die rise as wedian prrovig per SF has exceeded $175. the pfefecession iugfL This S mostly clue 1n the rat "I Invismam have been pun7hasing the hell askels, lhue�c Thal ar-e eLimpkicly brr:uplyd and in the boa. Incailonti For m*tAwc, tare Pyestdn 04ks ShoplN Center sold for $27 mlleon ($2611SF) at a 6.1% cap rate The asset was beet In 1991 ana Is anchored by a Cenral Nlaaet grocery store. Eafrher in 2413, Lrnivew ty Park ViUags in Fort VhDrih vas bought by Gin -cher Raaalty Trust for S#Q5 milon (WO&SR TtH3 174,41)0.5p ei5rur ws# over 9M O*dL1p*d xt the tirlc of the "de While +Mall n%kV be, pr•rceturd as Me risiuef properly class. especially In vomparkocm to apartments, neny mveslxs we a drspount of over 150 or even 240 basis points and Carr well-vcwpied retail pcoperhes ane new world Me amble Sul thio key Is that these assets are perkyr ing well tlday NoLc y Is rushing W buy died malls in DaNas, nor should they. Recent Tratnsadiaas #�, titali Ted aft OW PAM 04" P11"" @WWII gum Orfrne l' *4] Moo N kimi, fTyO* Rldgmar Mal Furs Q&4rGiS I;Iiowokow 1,.34E-97 W -U 99`6 GK Dwakxx ,t lie Tha Macanrh Cmpany walth I. Rio anal 1 Pubiel McKinney MiXinlwjr 01-0ri-13 S A637.70 171.7% 311".14 2COW uwp I'puhiri Tka lfhmk;L w G�mip Merka"u tpw4 lu7 MroMarkerplare F(H.Ort-" 147.041.120 1M.9214 #9769.77 M02. CORtmp Ouhkrl The $PockaaaffeCraup I Priomi) Rotlfwill Nrnl•L Radnhwi si-{7x1-13 !F19,4131,938 }2.# -IN ;ifg.ls INS MllhR Pwln.it lre..(PrW"I ,Urso ituidi IPH"* C.algr Mera'egiw 4vmg 01 -Oct -is S17.t�X940 n,254 521bf1 IWO DOR CUP, Lpuhksl the ewKk5bXMCwup Melkvlpd.ce; f #FN I.prrylft) .crolLHioke Comers rDANMke M•Od,13 317.043,000 '7T. 30 =O.H =j Firm l PTgm9as-otll4.nnw. Rio:;= Reel Ertele hlc.4PLme) Inwrlmwsl T" Ipubhq H. jxaudTh"l.ft I14nq W1-Od-15 SIELW,QW 73731 U-16AI 1999 12Mcarp.Ipulha>=1 Tho r3Y.1tatdl.6:aup I PM Ift) 9'1ack3Lan4CE, 0aR MasryAe 09,OrmS 116.18M270 U826t7 V17 -ala 2ML UW -CDM fVullYal The 11hKksbxw Omup podaiia I rhivalej Vflnr.ur B Sit., Cwh Ctlki t0.cid-13 515„317,190 iE G?] #417.85 .171 I RieCon Rdal E +IY BuhhA P.nnaR he Inx.r4llh.nl T-il IPu61-e; IP -Ah.) Ccpp.I T— C -nim, carp ii 111-00-13 314.$07,940 T3 DE$ sal:11.9 IWO RrI.0Pi�. L.xnrR; C " R.OUilAs Inr.. 10r) Imw,hn■M Tlvd IPublct PPLOKATY and POPTPOLtf7 RE5EAlkCH NC)rtTH AMMICA ria r. `.i -r 45 Res 14-45 Exhibit Quarterly Supply. Demand. and Vacancy .. rrrrr�.ln1�!•,1,llaia�! ■1�1}nYIIp1Y1FltA9y �4AnsneNlii� fi Frn14 _.111 ef9s •9c ,uill 2 i12%1 W 7091 MA 30g 70:0 "t 915 2-1,a 2M 709E MM 3M "I 20t3 TICS MA ME 9018 "7 Z1r2 1T1ti Supply, Demand. and Vacancy Stalistics , . Annuatl Tr9nds 2079 2911 20917 21190 2974 ZN: 29Te 209r 2994. Ghevl�u n `�r+pp17' - B1 515 E,454 ;1 577 .7:,94111 71 ,'.1A 19.+98 Cheng n Ll> nwd $31 19495 14114- 15,731 17 406 15,959 11i,3a1 ^S,IA;',n 94,189 r,.n -rI:6!41 133% 14..4% '@' 9.% ;^w. �9y ,�13 •rAI9: 115% "e1 34u+699011• m*% 9-A67E 91114% 8.t% 19. r, I199K 123% 99.0% 97% ;.1'X <t98061601L• 911.39E e.1 % 7B% 5.5% rt uAnk S109K 94% 77% 72% 879+. 41urtlfly'Trems 901204 2141341 2MM 1'01301:3 201MA 201401 90140 "11+03 201404 I;h&nAa.*±=.upp1.1.130 47J r6i 1603. 182e 07;; Ox3G- 6,GGC G.3A Channu nDA m�r1A1' 2376 1,343 11,912 4.876 6,340 S 319 4,157 4,138 51734 wns:°Ram EL Ram 4.474 B.DW 7.E% 4.a% 66.;4 E..4 x, It IW. tp.I% 19,79E 9.9% 7.5% H% Iggo. k^1I)IK g�7% 87% 04% 7.8% 71% <1. E80&100K— 7.B9E 73'A 7.D% 8.29E 5.57E 990&�:100K 7.3% 9.9% 611% 6A% 9.9% Fundamentals Overvleur Is the roller r9imetor dde ovia? Not yet, The strong vacalroy recvvery raver the past tm yean hes uwwruclivn craves bus{ as large uock$ or &parr are irtcrewwagRv haNer to r.,a Ahsorphcm 1n Da1Ln C0ffUntt% to *Mej 4110 (*ncl is eKp59:W to surpass peak 7 PROPERTY AND PORTPOLt4 RESEARCH 91ARTH AmF- ICA M Res 14-45 Exhibit i� Market Dalla!5 - FQgt 10 Rb Fundamen:taF5 Worth SUPPLY, DEMAND, AND VACANCY TRENDS Hisioncal and Forecast Surnrtlary Wslatical Peak n11d Ttulagh HN IbHrer ~myup � A.v4rAxJm Annual Qonth Rams% F€ taMcId FArrcal;l Doak Pvri d T a gp Pm wd �! � rarer. PPR54 'A aim PPR54 vraency A*4 17 = n. X 1003 36 V. 1 K F,- .'i SopOy a�lti" RA M. ? klm'.r 11 -- I '. � 3 E �4 ' 9, . Om. ndl)knnuAAll 9e,748" 1984 -4 :931' $11417 QAIn4nd ir1 9;l1y 1.97 r FTnl nAi 5upp4Y 100nu!1 71'.9.788' 2991 MAD GuffaMan D-67 rift C4n:aue C G'.x Quarterly Supply. Demand. and Vacancy .. rrrrr�.ln1�!•,1,llaia�! ■1�1}nYIIp1Y1FltA9y �4AnsneNlii� fi Frn14 _.111 ef9s •9c ,uill 2 i12%1 W 7091 MA 30g 70:0 "t 915 2-1,a 2M 709E MM 3M "I 20t3 TICS MA ME 9018 "7 Z1r2 1T1ti Supply, Demand. and Vacancy Stalistics , . Annuatl Tr9nds 2079 2911 20917 21190 2974 ZN: 29Te 209r 2994. Ghevl�u n `�r+pp17' - B1 515 E,454 ;1 577 .7:,94111 71 ,'.1A 19.+98 Cheng n Ll> nwd $31 19495 14114- 15,731 17 406 15,959 11i,3a1 ^S,IA;',n 94,189 r,.n -rI:6!41 133% 14..4% '@' 9.% ;^w. �9y ,�13 •rAI9: 115% "e1 34u+699011• m*% 9-A67E 91114% 8.t% 19. r, I199K 123% 99.0% 97% ;.1'X <t98061601L• 911.39E e.1 % 7B% 5.5% rt uAnk S109K 94% 77% 72% 879+. 41urtlfly'Trems 901204 2141341 2MM 1'01301:3 201MA 201401 90140 "11+03 201404 I;h&nAa.*±=.upp1.1.130 47J r6i 1603. 182e 07;; Ox3G- 6,GGC G.3A Channu nDA m�r1A1' 2376 1,343 11,912 4.876 6,340 S 319 4,157 4,138 51734 wns:°Ram EL Ram 4.474 B.DW 7.E% 4.a% 66.;4 E..4 x, It IW. tp.I% 19,79E 9.9% 7.5% H% Iggo. k^1I)IK g�7% 87% 04% 7.8% 71% <1. E80&100K— 7.B9E 73'A 7.D% 8.29E 5.57E 990&�:100K 7.3% 9.9% 611% 6A% 9.9% Fundamentals Overvleur Is the roller r9imetor dde ovia? Not yet, The strong vacalroy recvvery raver the past tm yean hes uwwruclivn craves bus{ as large uock$ or &parr are irtcrewwagRv haNer to r.,a Ahsorphcm 1n Da1Ln C0ffUntt% to *Mej 4110 (*ncl is eKp59:W to surpass peak 7 PROPERTY AND PORTPOLt4 RESEARCH 91ARTH AmF- ICA M Res 14-45 Exhibit Market � ) atlas - FQgt 10 Fa4 � Page 27, Fundam,erttals Worth 20`4 levels over tine fore and as poised to ^eemwn strong through the end of 2014 ars large national destributons expand thew presence Wb Tuttle produot beudt during ted psoeiVl recession ternarrM are qutckijr al Ling that w1hic r w25i delivered oyer the last cycle and haying imraasing trouble ftmdkyg sriemble Ia%e {spaces. Developers are respoMing in kind, kicking off spe+culattve construcbm In fact, demand is not fora9ast to keep pacib Villa the law supply jdCod to dedyar. While wacancies os large bkxdss (500,000 SF -plus) aro back to preiecesaamry kris, the midrange of the rnaehat (blocks Farrgir)g from 100090 SF-250.GOd SF} has been on the rise since 20111 As 41 rimul, expect CO 2*ucb" to be focu l on larger product and in key 10700C'# subr;tarkets. wCh ars Alliance, El -FW, and hl StemrriortO Vahaersd. Demand Trends motional *onsurher spending is driving dereian-d C;r,mpdnmts ora res rding tri ort- ioug retail salol bfr bceupying rrWft vOrbhbuso space in this national datributicn huts Manutacturers are bade sit w+3rk, and retailers afe resrtackairg their shelves. The prime blemfiriarias are the newer, larger (500,000 -plus} waroouses built during the last cycle, whictn already have the liglLetest wacancaes lin the market Granted, these do not fer,fo-,wil the whole market btpt damand for this rwX.wspace %MII rennin at a fever gash. eslpocloly with riurrmt affordable rents. The meta hait 8 n 4Taer 411 long Wm demand 91r1 aero that vr+ll Haat the rRafkei beyond tite MCOV*t'y+, Flat and Wctrr�At will be populatiern growM: Gallas -Fort Worth will boast the eighth -strongest papulation growth d the P R54 over rice torecarst This wAll primarily help drive marks# dennarxt far smaller and skier product ,geared tciwaTd local rebid and consilrudion indin kries. But the metro is elsa 9a major national distnbuton hub, because of its stnoig infrastructure pori -Is and lucrative trade agreements. Yar.,V9a River Express, a Shanghai -used Camp ra&ier, has s+lartod a cargo. svrviiuv ID Sha [YFO Alfpcirl The mpansw or the Panama Canal! will W a lar r•term der,*m driver fix D] F)N. While d:irectly beneriting, the port of iHousion the ex pansy in all also bode wiell for Dallas -Fog Worth, which hes ams tathe prtut- In iaa ONSF's intenrodal terminal at the Port of Houston leads directlyto bath interrixxial huts in Dallas. Tina A duan a Glkatsal Lcgi stim Club caatbinalating demand in the North Fart Alamh Suto¢alarket, Hilkwooci Properties and the Gity d Fort Worth are working on a 5232 million ptcpd to expand the airport's runway fmm, 9,0411 SF to f 1,000 SF The expansion will allow fully faded, fully fueledjets to tarn orf during the t.;arrn surr,e-h-r months, when the air Is thinner and p1ww& Rave a harder time g'-UlN df the ground. Other atrai tiorrs for the North Fo-t Worth Saxbrrarket include FoFeign Trade Zone sYahus• prommity to the RNSF inlermiodal facility, and impruvenmen#s to 1.35 Supply Trends ComiruCGCtn has surwd again. The supply pepalins Ims amplcded with 15 million SF currenve rn in the dewelopment process. For comparisoris sake, the market has historically deWered 1 t million SF annually. Devebper6 have traditionally been attractod to 'he metro's j0pendable demand growth and its =rnparatively low t2arrier$ r# &;try, and wllh rundarr "ft rapirdl1y iMprowNg, they are bin a*ing gm and Current supply isfocused around tFW airport and in the NE TarrantlAlltanQu Submarket, deme tx1 strong tranwporlatirrn eonnec6ons with 3 5 million SF of space under construction in build•bo-curl and spec buildings. r-'crnslructaxi stwlad on an Sf tliu€tri-2o-suit for RestoraWin Hardnare in the Luxrrsr Great SouHm i t Submarket, acrd Protogr. rs btrilding a t.? million SF build -to -suit for Flapst In . South East E)ti14gf1-45 Subrriarkut ArrrQzon, eyttig5 reeentN started poong sales tax in TC:x , "wed oft Iwo largo bat'sld-ai-suit distribubon cantars tctalkrg 2.2 million SF. And Idl is Putting up 529.000 SF spec destalbution center in the LvoOsr,ille SOtgmarket Whet abeut W"? trrstive tlevelopmerst is beck as national retailers and third -party logmb s firma burg their requirements For I%Ve, modern product to locaticn6 that infer transpositatitin efficient" At the mottmerrL the market hes 8.7 rriillion SF of spec space 1v be compieted each the lion's share around the DFWWaarprt and or the HE TasrantlAlliance Submarket. Hthtoad Oaktnont I ndustriat and IDI are adiye developers cuuertly putting up speculatroe sxece in the market Arizona -based RealEstateAAA as-sembtad 400 acres over the past three years in order to build a seven mison 5F, rall•senfad industrial park Located 20 riles south or Dallas the indusnial park will hews amess to bothi Interstate 45 and the Highway 287 Bypass. It istwxessful, the industefal park will bring the same shiftthat is currentiry Happening in the nort1woest, as new. large product is mclving intothe NE TarranUAltienoe Sabnmsket RENT TRENDS Tc Njl .r PIPP Graw rn. Revel Stellstfos PP,C)PMTr" AND POPMLl4 RQ5EAFkC.H 401# 26Y5 HC)RTH AMOUCA 2016 1'. -tx 1.115A 096 UN NA4 UA7 eiar.`.rr 47 Res 14-45 Exhibit Annul ids #t 2012 iii] Aske➢ Ft.wt MO 95.72 "m (I U 14 1 aa0r 6I OOK 113.67 33.30 i3 Se X66 Mat a 11 11J $5.401 ;6.44 Ss as 56'59 ,r9OU k 14011+ 52nd 12.02 1.300 33 17 +lWO& Mart, 3411 54115 $452 14.46 PP,C)PMTr" AND POPMLl4 RQ5EAFkC.H 401# 26Y5 HC)RTH AMOUCA 2016 1'. -tx 1.115A 096 UN NA4 UA7 eiar.`.rr 47 Res 14-45 Exhibit Market Dallas -) 4tt 10 Fats � Page 24 . � Fundarnental`5 Worth 2,014 Omit i Twnds 01224 3012M m1302 2IM303 W. 1'kQ4 tnam WW1, RMk'6F4`»i 4 2.. S.3 :x 5 E.::,. , P Sc '3 R % E r % - 5 R W. n9% ^# % AthkRerd MRB 5492 $3.95 aAa4 $414 $ria S4.i9 SL 24 5:4:23 9990rE IWK• +15 r9b3 a3 3350 53.55 33.00 1990r E',-t4WC 55.50 3639 55.49 35..49 35.54 Yuen & I(M. 55.90 53 A 33.37 53 09 S3.1 Rent Trends It's not every day that Dallas ;goes ih is kind of growth. Over the peat year, the Fundamentals recavery has been one of the best in th4 notion, and pr ting p; r it, rir,anlly shfbrta back to 1@ndkii% s. Va[- rio" siwld �=vtllnuri� to ditline omt reaC h Vit! Rr VKt Vk. c fb's Ions, promMing rent growth. However, rf supply chakes off Me fundemamals recovery, thew rent growth cauLd cecBiiiPy disappoint try the foremst's rJirt9r years Although thin Dallas market does not generally we a lot sof rem gmv& ayd is Wtonimilly volable, clear differences exist depending on where one invests. Bents only started to tum positive in t second half of 2012 while rent lasses for years prior ha4e almost amtirelx burr @ suppip-side phanamancr f vvvlvM--5 twe weren't ably W Vup gar$' armuah to avo4 a massive vacancy run-up, leaving the tracancy rade at an ali;bme high. The Asst distribution submart' U have performed the wore over the WSJ rune as t1my also attract developers who +rave a hard time saying `when " t tVisfi€s submarkets Race Alliance, r&PVV, and N. S'Temrn;w,,sValwcod get overtmAt, recessions. hd especially hard_ and rent grovkh magnates Infill subrnarkets are relshvely stable and ofer better -nng-term prospem for rent growth, but they oanerst of sm,*Ier, oadtr bwikiings No to,4virc Mh intgrlsive niagrvapl'nght arrd al fooAl rniprW. prrsence la is the @rasa of trxxed prC wA. such as Pkspia and West Tarrant, that have proven tea offer both stabMily and rent growth as they are relarwely land.canatramed, benefit from htp.h b,,;)l and nalldnal tanarill dahtltrd, ind direr "Itutlorial-gtAYfrtyl Inve! ftrrwl omorluniflet. , Average Rent CrowO YS"Ver-Yew � , , IM mr :cm :ov Am a'nr err, Nine ;i nr :rrn 3m arm :rni -rrra ars+ mm :nrr. xrn une am PPLOPFATY AND POPMLLO PE5EAFkt.H NC)RTH AMOUCA riar.`-n Res 14-45 Exhibit iIK Market Fundarnentaf5 TNVESTMENT TRENDS Sales Transactions Slatislics H islaricsil Annual Volume and PricdSgFr i-'.dur.,frAll�s� + F.i;crui6iiizksii 91 FTG 017 44# ser x93] �;• � w in IIli ^ a Clallas - FQgt Worth Annuat -21414 2w W.I.— lu'li—O $wo Via Madera Gap Rao 1'.S% 4.1i 'A Medan ?noWSgk 336 536 1900a B IDM.M+da. PokdMgFr wya7 547 1000+ G 11{100, PO.. Prk-SgFi $afi5N SE4 -I9pgB.1dtltt:Mr ewAeei's $5n t mala d -100 Meaen Price.SgF1. $35 W S3a 261 Mt 11ti9m11 -J¢—liJA—O M11 kledsrr C*P 0.4% A7% Meda *-NwPgFt 592 SM i9®0+G 100K+Median FrrcargFt w Sit 1.4800 6 -105K Madan Pricd MgFt 531.. 144 -v990 1{Jgmi. MgO.- Pri;."sgR 11g 595 -2990 5. 0OOK Medan Pri;*$qR $33 535 H islaricsil Annual Volume and PricdSgFr i-'.dur.,frAll�s� + F.i;crui6iiizksii 91 FTG 017 44# ser x93] �;• � w in IIli ^ a Clallas - FQgt Worth Annuat 211,1111 mAW �1111117 Mill RM 559E n "fit 0 5151 4 9.3ra 4.9% S3'a 54.0 5t2 547 $12S $afi5N 337. $'" $5n $*a $95 $29 5m�1 S3a 530 538 Quartariy 21012102 2012Q3 2x1294 S•':17 r 934 C. $."5 1 A n jc A.a 1c 65 7; W. 54S $ao mr 542 595 sse SEG S19 W. $31 $31 53, ST. S^:': 10 Falx I Page 25 2,014 "19 211,1111 mAW $M4 1r:%f $854.4 3959 a e.9% 7.U'% 0-.0% 7.6% S32 Sae Say Sas 5*5 337. w Se'r $31� 513 $al 3®5 $15 579 i$sf sw S3k 2013CH 2013122 .zm= M=4 ;1!' a 3199' $1851 $.177 a fag-% S55r. 7 y: 73°x, $37 w 535 $554 sea W S64 S60 5999 539 Sea S>=7 5'30 €i'rr $37 Recent Quaderly Volume and Price.SgFI M3.1 SKI zw1 T. im lizr 1' 93 Iriveslmenl Trends There's more to the stir then ,gest the tot.rt num hers. While overall Inves✓8wx4A has been a bt volarile over the past 12 months. lnvestrrrent.grade achvlty has gfewn. sure large national perffolm deals including a dumber aof O -FW assets have been dri"ng up the doll1w volurre. invesm prl:Ghased three irizustrial properfies at about 5847 "Hion, rwth 1 4 millirin SF, or S42dSF, in the East DFFSr' Air Submarket. I IT purcnarsed a portfok of seven properties in 12,24 at the Freeport Crcesing industrial complex to She East DFW Air Subrre*et, opining 1.2 million 5F, at almut 3233 42?SF3 and a rap rat» of 6.5%. Vacancy was estimated at 3% on ckzsing. The higher con*enidafl9n oill imresMwt-grad& properties in the clheiwiae low transactmn volur[re has caused an a"rent pop m the price per poww! of industrial asset, currendytrading 15% above their long-term average (2012; However, when lquidityfiriallyfetumsto tfle ngmnal and tradnsg won't be sic-Aied Inmerds the higher -end ,assets, pricing grov%M SMI slow dawn A closef lc*k shaws Some stltpi1sing nwff 1pkFyoMTrades havq, to1Ppisd up in nvniradilional in%mvrnornt subrnarkm. While immultami-it Volume is undoubtedly on the upar+lnq, the lvc rliwr of the ass+s traded may corn• as a bit of a surprise. S1atlmarkeft Ineated in the rrtelyds northeast and east porbone have seen more irwestnxent-grade sakes than at any other point in recorded berry F?$t G41,144s.. ort the r horld h*$ meted lot id55r m and Ienarlts with the opening -or Uniran Paclie* rh'rw Intvrrr5 OPI UiolitS 0 1-4$ in Winer. As Res[EstateAA A moves forMard, v iM pia rts'to develop a seven million SF industrial park. tale sularrarkedt wa continue to grown in see and statue Although this submarket m the smallest in the metra in terms of invanlory. rt is likely to, see outsizad imresbnerd aClWity in The mming year% PP,CPMTY AND POPMLlf7 PE5EAFtt.H +1C)prH AMOUCA Res 14-45 Exhibit PROPERTY AND P PM LLO RESEARCH HCJRTH AMP -AICA =o, P. .r 50 Res 14-45 Exhibit i� Market �_"9 1r_ �__ Dallas - F91t 10 Fab Page 2,S � FLandarnlentaFe Worth 2,014 Fher'aertk Tranaeclia�� TllaN1 WANWW Odra p0ty 44ft F t*ffl*Tl Sm 11144 Not" OTWO WWr Nmm iTW+F 1688 E Rana P4.y Piene 1B.=13 535 9Y X.j r4'.CCC :66.-,7 13M .4n}alc, Condon I Co, Ga,dw FlIdge LF instiullanaf moDOPWIA N Pv,4 - Fuma fTlydPltnul4"p '15�-twt-la $27.105 = 765,749 935.59 L4p4 AR IPUbkcl FIS. t,4C (nn9l.4amll Giv*aar MHFSUW LaworGFeW 06.0013 S2S.IS.2554 9Ei3,009 56426 20(j0 Lbe+trProparlty:-ui NaGBprEpmiaiIris CistrJ.wBw G`raaat4 Salrtmast IFtlhlrl 4pm-mal Llurrry Prgxrty Trust NE TarrOM 3lrEnea 89J]cG13 SIZES7.240 197,8136 58426 t997 Lbinsl Fra"ap Two GaW €Tpsolu Ine Embul Fu" Yl IRWAel {p&mal Boge FdF4VRr.rLas 08-0ct13 $11940614 100026 Sk.2C 30118 LteAy Prop"Truo Cabot PrqmAqn.lnc f:Jnas 1%birl ;Prwalai Apdar Gshi kun ME LlalaWGwiand 0q�4at-15 sic S ino 1715,734 t6425 MU LbKk7 ?isopwtp?mot Cabot Ph*. ti Ins Cedar IPuLlel{A*rmlal HL*mnetc &.arrrns k4arrgxwo..Addisan 88-0.01 59 574 Sm t494" $6# m 1497 Lkds y Fmp" Tow. Gahet FhgZrt." Irr Camer - I 1%biol qpr lmj Chr}9vPar4m H II-ber,I3 W_B2V5440 ±K423 lu4 16 lot pt cA A nl E3tr Lwmad drdde Nswhulim �,,er#r t.]am M.lNmmrom .&w4c*-, LLC (,Palm Prparum kis. cputk} 22syc" iia Oi Lc (31" 45-11.e-13 98, om 000 113iam $m 11 t%72 &a.n FamlL Frelliniai RAW& Ind."I Pmi1, SuWrxwd LLC I Ptl m*, ere.lp lvaLl) pinkgrww 70 Ldwe. Q,� .57 67 P4 0 427,126 W, 00 W5 N Ll -" j-. I.. ftLaOkzPL�wk5 . Gut"Fst Itr'rknmm} PROPERTY AND P PM LLO RESEARCH HCJRTH AMP -AICA =o, P. .r 50 Res 14-45 Exhibit NEIGHBORHOOD DATA A neighborhood is a grouping of complementary land uses affected by similar operation of the four forces that affect property value. These four forces include social, economic, governmental, and environmental forces. The objective of doing an analysis of the neighborhood is to observe and/or quantify data indicating discernible patterns of growth, structure, and change that may detract or enhance property values. The subject property is physically located in the northeastern area of Westlake in Tarrant County, Texas in close proximity to the City of Southlake. The following table is a summary of the subject's neighborhood boundaries. NEIGHBORHOOD BOUNDARIES North: Grapevine Lake South: Cities of South lake/Keller Boundary Lines East: DFW International Airport West: US -377 r{rglhlakr .t, S I / }y� r 1377 M ooktldll EIIa�b�tN 4+rm�tMry ��f ifs NEIGHBORHOOD MAP nr �i r r rq,lry i.;IrJll pm k YN00 Trall ,�'" ,Trophy Club er°' tura ofirla Lasm n fi .......... Yr .li .. { -. """" .. .. SUBJECT WMII,rr Ilike Fort Worth .Y I W D01M Rd +a, i . Ianal� T E K A 3 8 `, ,�:419hd prarlehd 05matery Suulhlekep ttuu, I r'� R r- u. N I —_ eF(ollor t4 ,N CQntlnarrtal lalvi9 .. d , . Q1,J UnIon :. T � f _ krorjoi Lir .t ti Fh r North Colla"lin N IMrrtrrtl PKwy Rll III m--0020 Tlrh r Rcl. Double Oak II �I °rluwul Mutrnd P 3090 Murrell Pm � ........ , .. �... ... Roekied6e Park ht II Oak Grove rk„ k Grapevine Cemetery unr 4, I �Grap&An.'41 4. DrW Airport POm3-Fu I rth li ilm rmbrihl rvrl:..II 51 Res 14-45 Exhibit General Development General development within the neighborhood consists of rural land with scattered home sites. The defined neighborhood has been dominated by residential rural community uses. Most of the development within close proximity of the subject ranges from new to 50 years old, more or less. Along SH -114, land uses consist of business parks and vacant land. Other land uses within close proximity to the subject include residential housing. Area influences include an emerging residential base. Neighborhood Life Stage The life stage of the neighborhood is growth. Area/Neighborhood Summary: Population Trend: Range in Improvement Ages: Public Transportation: Development Built-up: Maintenance/Condition: Property Compatibility: Appeal/Appearance: Protection/Adverse Influence Development Potential: Neighborhood Access: Police/Fire: Supply/Demand: Residential: Increasing New to 50 years None 50% Average Average Average Average Average Average Average as compared to other neighborhoods in this market area Vacant lot supply within the combined "Westlake, Grapevine, Keller, Southlake, and Trophy Club" submarkets is estimated to be between 1.7± to 1.9± years which is below the ideal level of two to 2.5 years. 52 Res 14-45 Exhibit Commercial: Development Trend: Value Trend: Population Trend: Employment Stability: Vacancy Trend: Change in Land Use: The vacancy rate for retail development is at 7% and at 14% for office development in the current quarter. Vacant land to residential, commercial, and retail usages Increasing Upward Average Decreasing Vacant land to residential and commercial support facilities 53 Res 14-45 Exhibit DEMOGRAPHIC PROFILE A study prepared by Site to Do Business (STDB) in October 2014, based upon 2010 census data and forecasted figures for 2013 - 2018, analyzes the population within a five -mile radius of the subject property, and includes the majority of the subject neighborhood. The following is a summary of the demographic data. DEMOGRAPHIC PROFILE MAP Traphy Club Ta rrarrr 0 T: 2_4, X "Ler Pkw _n G 7, A.,'_ - r %Nall 51 ��tetii�kc FAr� I iLwP 41',�r9ii i•ilvi��lrlrx� NSA �4.�171.4n dh to mound A� L mkci 54 Res 14-45 Exhibit Executive Summary Lat: 3842961.560104, Lon: -10817709.196699 Prepared by JIMMY JACKSON Ring: 5 mile radius Lattudc: 32.982350789 Longitude: -97.17713510 5 miles Median Household Income 2013 Median Household Income $124,744 2018 Median Household Income $132,270 2013-2018 Annual Rate 1.18% Average Household Income 2013 Average Household Income $162,175 2018 Average Household Income $189,173 2013-2018 Annual Rate 3.13% Per Capita Income 2013 Per Capita Income $55,072 2018 Per Capita Income $64,264 2013-201.8 Annual Rate 3.14% Households by Income Current median household income is $124,744 in the area, compared to $51,314 for all U.S. households. Median household income is projected to be $132,270 in five years, compared to $59,580 for all U.S. households Current average household income is $162,175 in this area, compared to $71,842 for -all U.S households. Average household income is projected to he $189,173 in five years, compared to $83,667 for all U.S. households Current per capita income is $55,072 in the area, compared to the U.S. per capita income of $27,567. The per capita income is projected to be $64,264 in five years, compared to $32,073 for all U.S. households Housing 2000 Total Housing Units 18,881 2000 Owner Occupied Housing Units 15,081 2000 Owner Occupied Housing Units 1,836 2000 Vacant Housing Units 964 2010 Total Housing Units 26,727 2010 Owner Occupied Housing Units 21,788 2010 Renter Occupied Housing Units 3,757 2010 Vacant Housing Units 1,182 2013 Total Housing Units 28,963 2013 Owner Occupied Housing Units 23,509 2013 Renter Occupied Housing Units 4,343 2013 Vacant Housing Units 1,1.10 2018 Total Housing Units 33,097 2018 Owner Occupied Housing Units 25,735 2018 Renter- Occupied Housing Units 4,743 2018 Vacant Housing Units 1,619 Currently, 81.2% of the 28,963 housing units in the area are owner occupied; 15.0%, renter occupied; and 3.8% are vacant. Currently, in the U.S., 56.4% of the housing units in the area are owner occupied; 32.3% are renter occupied; and 11.3% are vacant. In 2010, there were 26,727 housing units in the area - 81.5% owner occupied, 14.1% renter occupied, and 4.4% vacant. The annual rate of change in housing units since 2010 is 3.64%. Median home value in the area is $352,501, compared to a median home value of $177,257 for the U.S. In five years, median value is projected to change by 1.39% annually to $377,707. Data Note: Income is expressed in current dollars Source: U.S. Census Bureau, Census 2010 Summary File 1. Esti forecasts for 2013 and 2018. Esri convected Census 2000 data into 2010 geography. October 20, 2014 55 Res 14-45 Exhibit Demographic a■ Income Profile Lat: 3892961.560104, Lon: -10817709.196699 Ring: 5 mile radius Appraisal Versi• Prepared by JIMMY JACKSON Summary Census 2010 2013 2018 Population 75,111 81,924 92,475 Households 25,545 27,853 31,478 Families 2.1,264 22,991 25,827 Average Household Size 2.93 2.93 2.93 Owner Occupied Housing Units 21,788 23,509 26,735 Renter Occupied Housing Units 3,757 4,343 4,743 Median Age 40.1 40.7 40.5 Trends_ 2013 - 2416 Annual Rate Area State National Papulation 2.45% 1.48% 0.71% Households 2.48% L50% 0.74% Families 2.35% 1.43% 0.63% Owner HHs 2.61% 1.84% 0.94% Median Household Income 1.18% 4.00% 3.03% 2413 2018 Households by Income Number Percent Number Percent -$15,000 836 3.0% 699 2.Z% $15,000 - $24,999 7Z1 Z.6% 487 1.5% $25,000 - $34,999 1,018 3.7% 637 2.0% $35,000 - $49,999 1,603 &8% 1,167 3.7% $50,000 - $74,999 2,924 10.5% 2,871 9.1% $75,000 - $99,999 2,947 10..6% 4,361 13.9% $100,000 - $149,999 6,457 23.2% 7,506 23..8% $150,000 - $199,999 4,770 17.1% 5,769 18,4% $200,000+ 6,577 23.6% 7,960 25.3% Median Household Income $124,744 $132,270 Average Household Income $162,175 $189,173 Per Capita Income $55,072 $64,264 Census 2010 2413 2018 Population by Age Number Percent Number Percent Number Percent 0 - 4 4,271 5.7% 4,493 5.5% 5,163 5.6% 5 - 9 6,530 8.7% 6,403 7.8% 6,917 7.5% 10-14 7,816 10.4% 8,325 10.2% 8,871 9.6% 15- 19 6,314 8.4% 6,962 8..5% 7,688 8.3% 20- 24 2,418 3.2% 3,480 4,2% 4,098 4.4% 25- 34 5,068 6.7% 5,870 7..2% 7,642 8.3% 35-44 11,915 15.9% 11,462 14.0% 11,724 12.7% 45- 54 15,749 21.6% 16,578 20.2% 16,880 18.3% 55- 64 9.,135 12.2% 11,006 13.4% 13,61.6 14.7% 65-74 3,734 5.0% 4,881 6.0% 6,795 7.3% 75-84 1,559 1Z.1% 1,779 2.2% 2,293 2.5% 85+ 603 0.8% 687 0.8% 789 0.9% Data Nuke: Income is expressed in --nt dollars. Source: U.S. Census bureau, Census 2QLQ Summary Frle 1. Esri firreeasts for 2'OT3 and 2018. October 20, 2014 56 Res 14-45 Exhibit 57 Res 14-45 Exhibit Demographic and Income Profile - Appraisal Version G Lat: 3892961.560104, Lan: -10817709.196699 Prepared by JIMMY JACKSON Ring: 5 mile radius L..1 -_, = s ,_ Longitude: -97.17713510 Trends 2013-2018 3. y N 3 u a a 2. C 2 �9 W 1.5 m 1 E A— � � She 0. USA Papulation Households FamMl Oavner HHs Median HH Ino Papulation by Age 20- 113_ 16 14 12 Ol U 10 U G 8 up 6 E2013 4 r E2018 2- 0- 0-4 5-4 10-14 15-14 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85+ 2013 Household Income 475K-$%K S50K-374K 10.6% 10.596 S35K -$499 S.8% 25K - $34K 33% $1SK - $24K $LOOK - $1491( 23.2% 2-6% K$BSK 3.0% $100K+ 23.6% $150K - $155K 17.1% Source: U.S. Census Bureau, Census 20110 Summary File 1. Esn fn-sts for 2013 and 2018. October 20, 2014 57 Res 14-45 Exhibit General Real Estate Trends The Town of Westlake was named "America's Most Affluent City in the Country" by Forbes magazine in 2011 and tied for the most affluent city in 2012. The city/neighborhood has several high profile developments. The most important are discussed as follows: ❖ Southlake Town Square is a 130 -acre "small-town downtown" that serves the City of Southlake, as well as the surrounding area. The square includes retail, office, restaurants, entertainment, housing, a hotel, and civic institutions including a post office, town hall, and library. The first phase of Southlake Town Square was designed by renowned architect David Schwarz to look as if it had evolved naturally over a 100 -year period and all phases added have embraced that same underlying design principle. Phase I opened in March of 1999 and consisted of 234,881 square feet of office and retail. A city park and pavilion established Southlake's first Main Street. Over the next four years, Southlake Town Square grew to 14 restaurants, 58 offices, and 67 retail stores, including most of the nation's leading retailers. In addition, construction was recently completed for 46,795 square feet of additional retail and office space, in addition to a 14 -screen Harkins Southlake Town Center movie theater and a Hilton Hotel. ❖ Forest Park Medical Center is currently under construction on the south side of SH -114 just east of N. White Chapel Boulevard. The project will include an acute care hospital of approximately 140,000 square feet, a medical office building of approximately 80,000 square feet, and a parking garage. This represents the first phase of development of what will ultimately be a 30 acre medical campus encompassing roughly one million square feet of medical uses. The three-level hospital will have 12 operating rooms, two procedure rooms, 46 inpatient rooms, VIP suites, ICU beds, and an emergency room, and will employ about 300 people. A variety of diagnostic and treatment services will be provided at the facility to meet patient needs in the region. ❖ Solana is an internationally acclaimed campus project located in Southlake and Westlake, Texas along the Highway 114 Corridor, eight minutes northwest of Dallas/Fort Worth International Airport. The 900 -acre site is being developed in phases as a mixed-use development of low-rise campus office buildings, a Village Center comprised of hotel, retail, restaurant, educational and recreational space, and a single-family residential community. To date, over 2.5 million square feet of office space has been constructed, including the highly acclaimed headquarters for Sabre Holdings. ❖ Bob Jones Park, located on North White Chapel Road, is a 484 -acre park (including a Corps of Engineer's lease) including a nature center, a six -acre and a two -acre pond with pavilions and docks, equestrian trails with equestrian parking lots, 17 soccer fields (three with lights), six practice ball fields, and an amphitheater providing recreational activities for the area. M. Res 14-45 Exhibit ❖ Royal and Annie Smith Park is a 13 -acre park which is proposed to be improved with a paved nature study area. ❖ Southlake Pathways is a master -planned system adopted in May of 2001 recommending a total of 40 miles of multi -use trails including seven miles of cross-country trails and four miles of natural greenway trails. The trails are planned for pedestrian, bicyclist, and equestrian recreational use and are to connect to existing greenbelt trail systems in Westlake, Keller, Colleyville, and Southlake. ❖ Westlake Entrada will provide a new spirit to the town of Westlake. Currently being designed and planned, Westlake Entrada will be a $410,000,000±, master -planned project, built to perfect the ideology of NeoRetroism. The Westlake project will be a development comprising all a resident would need for daily life - commercial, retail, and residential. Westlake Entrada is the closest one can get to living in a true village; it will offer even the very basics, such as a farmers' market. Westlake Entrada hopes to break ground on Westlake's first mixed-use development in Summer 2014. The European -style village, featuring Spanish style architecture, will be located at SH -114 and Precinct Line Road/Davis Boulevard and will include up to 322 residences, as well as retail shops, hotels, restaurants, medical offices, entertainment options, an amphitheater, and a large water feature which will include a Venetian -type signature bridge. ❖ Westlake Academy - The Town of Westlake owns and operates Westlake Academy, a prestigious and innovative charter school that offers all three programs of the rigorous International Baccalaureate (IB) curriculum - Primary Years Programme, Middle Years Programme, and the Diploma Programme. Westlake Academy continues to maintain the rating of Exemplary awarded by the Texas Education Agency. Additionally, Westlake Academy has been nationally ranked by US News & World Report, Newsweek, and the Washington Post. All Westlake residents are eligible to enroll at Westlake Academy. Nearly 700 students currently attend the academy in grades K -12th. ❖ Granada is a new, gated, single-family development to be located at the northeast corner of Dove Road and FM -1938 in the Town of Westlake. This development is platted and being developed with 84 lots on approximately 84.28 net acres (1.0 upa) and is planned for homes in the $1.2 million range. Approximately 13 of the lots are located within the Keller ISD boundary lines and the remaining lots in the Carroll ISD boundary lines. 59 Res 14-45 Exhibit Conclusion The neighborhood is characterized as one of the more affluent cities in northeast Tarrant County as well as the United States. The Town of Westlake is comprised of one primary thoroughfare, SH -114 which links it to surrounding cities such as Southlake and Trophy Club, as well as access to other thoroughfares that provide access to neighboring communities of Colleyville, Keller, and North Richland Hills. The neighborhood is comprised of luxurious homes that are support for the large amount of office and light industrial facilities in the general market area. Furthermore, the neighborhood's central location to the DFW International Airport and Fort Worth Alliance Airport has also fueled growth and development for commercial facilities within the neighborhood. Therefore, the overall social, environmental, and governmental forces currently affecting the neighborhood are generally positive. No significant detrimental influences are noted. M Res 14-45 Exhibit WESTLAKE ENTRADA MASTER PLAN 61 Res 14-45 Exhibit WESTLAKE ENTRADA MASTER PLAN - POD LAYOUT 62 Res 14-45 Exhibit WESTLAKE ENTRADA MASTER PLAN - BLOCK DESIGNATIONS 7 63 Res 14-45 Exhibit PLAT OF EAST RESIDENTIAL POD F Z Res 14-45 Exhibit GENERAL DESCRIPTION OF WESTLAKE ENTRADA The subject property overall totals 85.921 gross acres and has been engineered to be developed as a master -planned, mixed-use community to be known as "Westlake Entrada". The planned development is intended to promote the compatible mixed-use development of retail, office, hotel, attached and detached residential, vertically - integrated mixed-use buildings, Artisan suites, and core civic uses such as Town Halls, performing arts centers, libraries, and educational facilities in a pattern evocative of small European Village Centers. Also key to Westlake Entrada will be the creation of a large-scale water feature with several signature bridges including one premier pedestrian bridge similar to those found in Venice, Italy. It is expected that several operating boats may be placed on this water feature to operate as a water taxi. Additionally, a focus on water -front development will provide services such as a cafe, diner, boutique hotel, or other similar curio uses along the harbor's edge. The community is to be developed around an 8.340 -acre lake which will wind throughout the development and will include approximately 9.200 acres of open space. This proposed development will provide a total of 207 residential lots including 127 single-family lots on 12.510 acres (10.2 upa) within the initial phase of development (West Residential Pod). The development will also include the creation of the 31 commercial/mixed-use pods that include 115 residential condominiums as shown on the development plan. Future development work will also include a super pad (East Residential Pod) allowing for an additional 80 single-family lots on 9.490 acres (8.4 upa). The bond development will include all required offsite costs such as the extension of public water and sanitary sewer to the site as well as the creation of the aforementioned lake with concrete walk and 18' of freeboard that will accommodate the entire development for water detention purposes. This allows for a higher level of development for each of the subject's commercial/mixed-use pods as well as the residential lots. This will be discussed in more detail later in this report. Development of all interior streets, with the exception of Luarca which serves the proposed single family lots within the East Residential Pod, will be completed as part of the bond development. Finally, all interior street and utility development will be completed to serve the 127 residential lots in Phase I (West Residential Pod). The development will include numerous interior streets providing access to the different neighborhoods within the development. They include Cuenca, Zafra, Baeza, Carmona, Ronda Mijas, Nerja, Elche, Sitges, Cadaques, Santilla del Mar, Deia, Pedraza, Luarca, Valdes, Foncebadon, Consuerga, Galisteo, Ciudad Real, Fondon, Comillas, and Arta. 65 Res 14-45 Exhibit The main entry to the development from Davis Boulevard will be Santilla del Mar, a two- lane thoroughfare (37' foot right -of way) extending southeasterly through the development to Ciudad Real at the southern boundary which is also the main entry from Solana Boulevard. Ciudad Real will be a four -lane divided thoroughfare (59 foot right -of way). The remaining roadways will be two-lane thoroughfares (33 foot right -of way) providing secondary access to the interior portions of the property It is noted that the 31 commercial/mixed-use Pods will have varying land sizes. In addition, the parcels also have varying allowance of density (amount of building per land site). We have provided a summary of the parcels in the following exhibit: Parcel No. Block Buildina Use SUMMARY OF SUBJECT PARCELS Site sl Plan Deanatian Description i Total Buildina Square Footage Size/Gro$ Pad 5F Size/Gross Acres Zoning - Use 1 A Commercial Corner Retail Bank I&Retail 6,000 12,600 0.29 Village -MU 2 Q Office (Commercial) 6 Building Complex 2 -acres Hillside Office Complex 112,000 84,000 1.93 Village -MU 3 B Commercial Gas Pad G mnastica/Dancestudies 25,000 37,500 0.86 Village -MU 4 B Commercial Gas Pad Retail She s&Stores 47,200 61,360 1.41 Village -MU 5 B Office Commercial Gas Pad Administrative, Medical Office 44,000 66,000 1.52 Village -MU 6 B Offi ce (Commef[la1) Gas Pad D-13 Reta i17600s ft 14,000 21,000 0.48 Village -MU 7 B Public Gas Pad Parking Garage- 200 per floor, 5 floors 85,000 1.95 Village -MU 8 B Commercial Gas Pad Bank2- Inline Gas Pad with 2 above 7,500 8,250 0.19 Village -MU 9 C Commercial Coliseum Children Theater I Museum / Bakery 20,200 1 22,220 0.51 Village -MU 10 C Hospitality (Commercial) 114 Boutique Hotel on the Hillside -80 Villas 61,500 127,888 2.94 Village -MU to `° C Public Coliseum Back of Housefor Coliseum -4stories - 37,400 0.86 Village -MU 11 m' .3 ° C 12 Condos Condo Residential Coliseum Condos 33,312 Village -MU 12 C Commercial Waterfront Chapel Reception Hall -Trp it 5,800 8,700 0.20 Village -MU 13 �Z C Commercial Waterfront Restaurants onthe Water 29,800 58,110 1.33 Village -MU cc o C 9 condos Condo Residential 9 Condos oyer restaurants 22,509 Village -MU 14 D Commercial Farmers Market Waterfront Retail 21,900 32,850 0.75 Villaq.-MU o ¢ D Commercial Waterfront First Floor Retail 30,000 45,000 1.03 Village -MU 15 3 D 4 Condos Condo Residential Retail Harbor Residential 10,004 Village -MU 16 D Institutional Waterfront Assisted Lwing 33,000 49,500 1.14 Village -MU 17 D Office (Commercial) Waterfront Town Ha I I - TWC-StorV Office 22,000 33,000 0.76 Village -MU 18 n m d� =g D Commercial Waterfront Harbor Retail -First Floor Only 37,800 56,700 1.30 Village -MU 3 O w D 24 Condos Condo Residential Retail Harbor Residential 60,024 Village -MU ca ^ v D Commercial Waterfront Harbor Office Wrap -48ks ft 48,000 78,000 1.79 Village -MU 9 m 3 € D 24 Condos Condo Residential Harbor Wrap Condos 86,424 Village -MU 20 F Commercial Plaza Nursing Building - First Floor Plaza Reta i l 25,000 36,250 0.83 Village -MU 21 F 1 Hospitality Commercial Plaza Hotel l on plaza 120 rooms 97,000 87,500 2.01 Village -MU 22 F Hospitality Commercial Plaza Hotel on plaza 120 rooms 97,000 87,500 2.01 Village -MU 23 F Institutional Plaza Nursing- 193 Units at 1200 sgft 231,600 97,312 2.23 Village -MU 24 1 Office Commercial Corner Office I nformation Center 2,100 7,500 1 0.17 Village -MU 25 o° m N Commercial Corner Retail 18,000 sgft Retail 18,000 27,000 0.62 Village -MU 'oma N 12 Condos Condo Residential Resi oyer Retail 30,012 Village -MU N Commercial Corner Retail D-13 Reta i 11600s ft 6,000 18,000 0.41 Village -MU 26 o N 6 Condos Condo Residential Resi over Retail 15,006 Village -MU o cc;.� N Corner Retail CVS 15,000 22,500 0.52 Village -MU 27 U 8 K N 1Commercial2 Condos Condo Residential Resi over Sprouts 43,212 Village -MU 28 M Commercial Corner Retail Primrose 11,000 51,412 1.18 Village -MU 29 A Commercial Corner Retail Retail 17,900 1 2,960 0.99 1 VIIIa a -MU c o A Office (Commercial) Corner Office Bel l Tower Office 36,000 14,694 0.34 Village -MU 30 O o A 12 Condos Condo Residential Bell Tower Condos32,400 Village -MU 31 R OIice1Commercial) Internal Office Office Pad on SH 114 36,000 54,000 1.24 Village -MU ROW Lake Open Space I Buffer Parking Deck West Residential East Residential $ 39,184.59 per Unit of PID Assessment TOTAL GROSS ACREAGE 1,491,203 372,100 266,100 255,500 264,600 412,078 363,258 400,734 163,881 544,855 413,240 9.46 8.34 9.20 3.76 12.51 9.49 86.542 Village -MU Village -MU Village -MU Village -MU Village -MU Vi11a a -MU Res 14-45 Exhibit The overall development will be separated into groups of uses, although each grouping actually allows for mixed-use. As such, although a grouping might be planned for a theme of some sort, the pod area might have a variety of usages. The groupings are described individually as follows: Block A will be located at the southeast quadrant of SH -114 and Davis Boulevard and includes Pods 1 and 2. This is a high profile sector which is expected to include both retail and small and large office uses. Pod 1 is projected to include typical retail uses such as strip center and/or retail banking whereas Pod 2 is expected to have a large office use. Block B, to be known as Mesa Park, will be located on the south side of SH -114, east of Davis Boulevard and includes Pods 3, 4, 5, 6, 7, and 8. This block will be highly visible, but is only accessed from internal streets within the development. It is noted that this block has a large existing gas well in the center of the block which is a lower profile sector that is expected to be developed by a variety of retail, office and commercial uses surrounding the existing well head. Pods 3, 4, and 6 are projected to include typical retail and commercial uses such as strip center and/or gymnastic/dance and other semi -retail commercial uses whereas Pod 5 is expected to have large office uses and Pod 8 is expected to have small office uses. Pod 7 is expected to be developed with a public parking garage and is not considered to have any direct value to the dirt/building potential as this area will be shared parking for properties within Block B as well as portions of Block D. Block C will also located on the south side of SH -114, east of Davis Boulevard and includes Pods 9, 10, and 11. This block will be highly visible, but is only accessed from internal streets within the development. Pod 9 is projected to include typical retail uses such as theater, museum or bakery and/or other semi -retail commercial uses whereas Pod 10 is expected to be a small boutique hotel. Pod 11 is expected to be a combination of a public building with approximately 12 condominium units and is to be valued as multifamily. Block D, to be known as the Harbor, will be located on the north, south, and west sides of the proposed lake, south of SH -114 and east of Mesa Park (Block B) and includes Pods 12, 13, 14, 15, 16, 17, 18, and 19. This block will have extensive views on all sides of the adjacent lake and is accessed from Fondon to the north, Ciudad Real to the south, and Santilla del Mar to the west. Pod 12 is projected to be a lakeside Chapel/reception hall which is considered to be high-end retail whereas Pod 13 is expected to be a mixture of restaurants and nine condominiums and is to be valued as a combination of high-end retail and multifamily. Pods 14 and 15 are planned for strip retail such as farmers market type shops and food courts and other typical retail uses. In addition, Pod 15 will also contain four condominium units. Pod 16 is planned for assisted living use with Pod 18 planned for a combination of retail and large scale office use as well as 24 condominium units while Pod 19 is planned for a combination of large scale office and 24 condominium units. Pod 17 planned for the cities Town Hall and is expected to be deed to the city. As such, Pod 17 is not valued herein. 67 Res 14-45 Exhibit Block E is located at the southeast quadrant of the overall development and will be accessed by Ciudad Real. This block will be entirely occupied by future single family residential lots to be known as the East Residential Pod. This pod will contain 9.490± acres (413,384 SF) and is planned to be developed with 80 single-family lots (8.4 upa) as a future phase within the Westlake Entrada development. Although not part of the bond development, the 80 future lots are projected to be completed by the subject developer by April 2017 and are planned to be developed with varying lot sizes ranging from 2,375 SF to 5,419 SF and an overall average lot size of 3,436 SF. The 80 future lots are designed for a mixture of front and back entries and are summarized below: Westlake Entrada - East Residential Pod Total Lot Size Total Lots (SF) SF 9 2,375 21,375 26 2,625 68,250 1 2,804 2,804 19 3,126 59,394 1 3,745 3,745 3 4,220 12,660 4 4,944 19,776 1 4,975 4,975 3 5,026 15,078 8 5,066 40,528 3 5,250 15,750 1 5,419 5,419 1 5,089 5,089 0 54,664 2Z4.M 3" As it is to be fully developed with single family lots as part of the bond development, the West Residential Pod will be descried in more detail in the following section. Block F, to be known as the Plaza, will be located on the north side of Ciudad Real with frontage on Santilla del Mar and Galisteo and includes Pods 20, 21, 22, and 23. This block will be highly visible as is designed one of the focal points of the development as it will contain a fountain and hotel plaza area along with several parking garages, some of which will be public. Pod 20 is projected to include small office usages whereas Pods 21, 22, and 23 are expected to be a hotels, assisted living and/or nursing home. Block I is located immediately east of Block A with access from Davis Boulevard and visibility from both Davis Boulevard and SH 114 and includes Pod 24. This is a high profile sector which is expected to be a typical office use as it is planned for the project information center. Res 14-45 Exhibit Block N is located at the east quadrant of Davis Boulevard and Solana Boulevard and includes Pods 25, 26, 27. This is a high profile sector which is expected to include both typical and high-end retail uses. Pods 26 and 27 are projected to be typical retail uses while Pod 25 is expected to be high-end retail. Pod 25 will also contain 12 condominium units while Pod 26 will contain six condominium units and Pod 27 will contain 12 condominium units. Block O is located just east of Block N with access from Davis Boulevard and visibility from both Davis Boulevard and Solana Boulevard and includes Pod 28. This is a lower profile sector which is expected to be a retail/commercial use as it is planned for a child care facility. Block Q will be located adjacent to the southeast quadrant of SH -114 and Davis Boulevard and includes Pods 29 and 30. This is a high profile sector which is expected to include both retail and office uses. Pod 29 is projected to include typical retail uses such as strip center whereas Pod 30 is expected to have an office use within a Bell Tower as well as 12 condominium units. Block R will be located adjacent to Block R with visibility from SH 114, but will be access from the interior road system. This block will contain only Pod 31 and planned for office use. Res 14-45 Exhibit PLAT OF WEST RESIDENTIAL POD Nt 70 Res 14-45 Exhibit SITE ANALYSIS - WEST RESIDENTIAL POD (127 LOTS) The "West Residential Pod" is proposed to be developed with 127 single-family lots on land totaling 12.510 acres (10.2 upa) as part of a multiphase, master -planned, mixed- use development to be known as Westlake Entrada. Access to the proposed lots will be provided from two entries/exits. One will be from Ciudad Real on the southern boundary (one of the main thoroughfares of the development that accesses Solana Boulevard) and the other from Santilla del Mar (one of the main thoroughfares of the development that accesses Davis Boulevard). The general characteristics of the subject follow. For a visual of Phase I, see the previous page. The 127 lots are designed for front entry access with the lot sizes summarized below: Westlake Entrada, West Residential Pod Total Lot Size Total Lots (SF) SF 48 2,625 126,000 21 3,126 65,646 5 2,375 11,875 4 2,250 9,000 1 3,745 3,745 2 4,220 8,440 4 5,026 20,104 1 2,804 2,804 4 4,813 19,252 1 4,975 4,975 2 5,564 11,128 7 4,944 34,608 3 5,089 15,267 1 3,386 3,386 4 2,500 10,000 1 5,419 5,419 4 5,625 22,500 14 5,066 70,924 12Z Z3.552 44.5 4M Average 71 Res 14-45 Exhibit General Site Information Location (Phase 1): Northeast side of Solana Boulevard, southeast of SH -114 and Davis Boulevard, Town of Westlake, Tarrant County, Texas Land Size: 12.510± acres (544,855 SF) Frontage: The subject is part of a master -planned mixed-use community which has frontage along SH -114 (northern boundary), the east side of Davis Boulevard (western boundary) and the north and east sides of Solana Boulevard (southwestern boundary). School District: All of the lots in the West Residential Pod are located in Carroll ISD. This district includes Westlake Academy a public charter school accredited by the Texas Education Agency. In addition, the Diploma Programme is authorized by the International Baccalaureate Organization in Geneva, Switzerland and the IBNA. Utilities to Site: The utilities are assumed to be available and of adequate capacity to service the site for moderate density residential and commercial uses. Shape of Tract: Slightly irregular Topography: Rolling to sloping Zoning: PD 1-2 "Planned Development 1, Planning Area 2" This district allows a wide range of high density development including office, retail, residential, and entertainment uses. Access: The subject, as part of a larger assemblage of land, has above-average accessibility and visibility with its visible location fronting SH -114 and access from Davis Boulevard and Solana Boulevard. Easements/Encroachments: According to the general development plan provided, the subject appears to be free from any adverse easements and/or encroachments. Surface Drainage: Appears adequate 72 Res 14-45 Exhibit Soils: A soil analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soil report, it is a specific assumption that the site has adequate soils to support the highest and best use. Subsurface Conditions: It is assumed that there are no hidden or unapparent conditions to the property, soil, or subsoil, which would render them more or less valuable. Subsurface oil, gas, or mineral rights were not considered in this report unless otherwise stated. Nuisances and Hazards: No nuisances or hazards were noted that would adversely affect the use of the property. Adjacent Uses: North: Vacant land South: Granada (single family subdivision) East: Vacant land West: Vacant land Existing Street Improvements: Solana Boulevard is four -lane, divided, with median concrete roadway providing north/southeast access to the subject and to portions of the area. Davis Boulevard is six -lane, divided, with median concrete roadway providing north/southwest access to the subject and to portions of the area. Proposed Street Improvements: Santilla del Mar will be a two-lane thoroughfare (37' foot right -of way) extending southeasterly through the development to Ciudad Real at the southern boundary. Ciudad Real will be four -lane thoroughfare (59' foot right -of way) extending northeasterly through the development from Solana Boulevard to the northern boundary. Flood Designation: The subject is located on FEMA Panel 48439CO085K dated September 25, 2009 found on the following page. According to this map as well as additional information provided, by G & A Consultants, LLC (engineers and surveyors), none of subject is located within a floodplain area. 73 Res 14-45 Exhibit Conclusion: Overall, the West Residential Pod is well suited for residential development. All utilities are assumed to be available and there will be no easements, restrictions, or encumbrances that appear to negatively affect the value or marketability of the subject's 127 proposed residential lots. 74 Res 14-45 Exhibit FLOOD MAP 75 Res 14-45 Exhibit STD'BO N LI N E,.Com PROPERTY ADDRESS: Lot%3A+8893109.268855%2C+Lon%3A+-10817897.978074 / 4 FLOODSOURCE .J1 FLOODSCME" Nt 714i C 1 8811 North a *a ao 7 T I , ZONE X ZONE X � LIMIT !7F r a NE J( DETnILED STUDY ONE. AE kj nod Branch Tributary TOWN O4$0 FLOODSCAPE'l' �I �STLAKE CFOVJ ZONE X-- Flood Hazards Map r �p1itY Rftd6 S I UMrT OF Map Number 48439CQfl85K FLOQDWkY f `9 Effective Date 4 rJj September 25, 2009 - Z Flood Legend ? High flood risk _ Lx C 'l Moderake flood risk LIMIT OF FLOODWAY aj r,� � ��,� * Low flood risk ry i r 5 ,, r - COG pRl+l� 5.=port makes nD ^ L' zV !E5eni371.6n5 SA Wdfl-dFl4TK Epr xcem�Vit. —tent s ,--y ZONE AEF o f ur completeness. TOWN OF 114ES LAKE 5TDBnnline.com r CITY OF SCUT LADE 1 489.574.1234 Iii i` 600' IA1200 r•i";, ?Wi]i]' Ro6rN LANE ?avered 6y FloodSorace ^` VOCKINGIBIR!7 t M- l` 5i7.7"r:FLoOD ,vxW.4irxidsource.ean L 75 Res 14-45 Exhibit ZONING AND DEED RESTRICTIONS As discussed, the subject is zoned PD 1-2 "Planned Development 1, Planning Area 2" by the Town of Westlake which permits development as shown on the exhibits herein. This "PD Ordinance" was adopted to establish a superior quality mixed-use development with design features and planning elements reminiscent of a European pedestrian -scaled village. The "Ordinance" provides for the integration of vertical and horizontal mixed uses that allow commercial, retail, governmental, hotel, and entertainment uses, as well as single-family detached and townhome residential uses on the property bounded by Solana Boulevard to the south, FM -1938 (Davis Boulevard) to the west, and SH -114 to the north, and to provide an appropriate transition between the intensity of the SH -114 Corridor to the north and the existing and anticipated residential development to the south. In the first year of active development the developer is entitled to permit ten (10) initial residential units. After the initial ten (10) units, the developer is then entitled to units eleven (11) through (30) after 45,000 non-residential, air-conditioned square footage are permitted. In the second year of active development, construction shall not exceed an additional sixty (60) units. In the third year of active development, construction shall not exceed an additional eighty (80) residential units. In year four of active development and subsequent years, residential construction will be based upon a 1,500:1" ratio of non- residential use building space for each additional residential unit permitted. It is noted that for commercial development that no FAR limitations are imposed by this Ordinance. Maximum density is a function of the scale, size and scope of each phase of the Village Development as prescribed within Exhibit 3 "Westlake Westlake Entrada Development Standards" and Exhibit 6 "Westlake Westlake Entrada Residential Development Standards," as well as the PD Concept Plan, the PD Site Plans, any Developer Agreements and height restrictions established in this Article. As such with no maximum density and FAR, a minimum lot size of 400 square feet, no minimum lot width, and a maximum height for all structures at 735 feet above mean sea level, the subject will be similar to a major high density urban area. Townhomes shall be built in clusters of no less than two units per contiguous building and no more than 18 units per contiguous building and shall be conveyed on a fee- simple, platted lot. The minimum townhome size is 1,800 square feet with minimum single-family, detached homes from 2,500 square feet. Finally, it is noted that all of the uses that will utilize public supported parking areas will be required to apply and receive a special use permit (SUP) from the town. Sup's are very common in the market area and this fact is not considered to be detrimental to the individual pods or the overall development. Furthermore, this fact has been considered in our valuation. 76 Res 14-45 Exhibit AD VALOREM TAXES Tax Rates The Tarrant Appraisal District does assessments on a countywide basis. Because assessed value is typically the result of a mass appraisal process based more on statistical probability than individual property characteristics, it should be noted that there is frequently a difference between assessed value and market value for an individual property. It is noted that part of the subject is located within the Carroll ISD and part is located within the Northwest ISD. As such, the 2014 tax rates (set in October of each year) for the taxing authorities pertaining to the subject are shown as follows: 2014 TAX RATES/CARROLL ISD Authority Tax Rate/$100 Tarrant County $0.264000 Tarrant County Hospital $0.227897 Tarrant County College $0.149500 Tow n of Westlake $0.156340 Carroll ISD $1.400000 Trophy Club MUD #1 $0.133390 Total Tax Rate $2.331127 Source: Tarrant Appraisal District 2014 TAX RATES/NORTHWEST ISD Authority Tax Rate/$100 Tarrant County $0.264000 Tarrant County Hospital $0.227897 Tarrant County College $0.149500 Town of Westlake $0.156340 Northwest ISD $1.452500 Trophy Club MUD #1 $0.133390 Total Tax Rate $2.383627 Source: Tarrant Appraisal District 77 Res 14-45 Exhibit Tax Liability In Texas, real property is required by law to be assessed at 100% of its estimated market value. The subject is assessed by the Tarrant Appraisal District under eight account numbers within the Carroll ISD (04319087, 04319109, 05243297, 05243343, 07121202, 40888584, 05243351, and 04519329) and under three account numbers within the Northwest ISD (40778436, 40778479, and 40778487) with a total assemblage of only 74.102 acres. It is noted that the acreage sizes determined by appraisal districts frequently differ from actual metes and bounds descriptions on large un -platted land sites. This is the case relative to the subject which is a total assemblage of 85.921 acres. Following is a summary of the subject's tax assessments: The total 2014 assessment for these 11 tracts was $3,984,662 or $1.23/square foot based upon the tax district's total assemblage of 74.102 acres. As our valuation is based upon smaller developed sub parcels and not the whole site in its present condition, the current assessments have no bearing. Based upon the 2014 assessments and the 2014 tax rates, the applicable taxes for the subject as 74.059 acres are $93,141 or $1,257/acre ($0.03/SF) based upon the districts land size of 74.059 acres. It is noted, the estimated taxes for the subject's 127 residential lots developed on 12.510 acres within the West Residential Pod and the future 80 lots within the East Residential Pod will be based upon our market value opinions as noted within the discounted cash flow statements within this report. Res 14-45 Exhibit SUBJECT'S TAX ASSESSMENT SUMMARY Total 2014 Ag. Exempt Total Tax Rate Total Total Ag. Exempt Acct. No. Ownership Acres Total SF Assessments Assessments Per 100 Taxes Taxes 04319087 Maguire Prtns-Solana Land LP 3.000 130,680 $163,350 $381 $2.331127 $3,808 $9 04319109 Maguire Prtns-Solana Land LP 9.713 423,098 $528,873 $1,234 $2.331127 $12,329 $29 05243297 Maguire Prtns-Solana Land LP 14.770 643,381 $804,226 $804,226 $2.331127 $18,748 $18,748 05243343 Maguire Prtns-Solana Land LP 8.620 375,487 $469,359 $1,095 $2.331127 $10,941 $26 07121202 Maguire Prtns-Solana Land LP 8.710 379,408 $569,111 $569,111 $2.331127 $13,267 $13,267 40888584 Maguire Prtns-Solana Land LP 3.250 141,570 $176,963 $413 $2.331127 $4,125 $10 05243351 Maguire Prtns-Solana Land LP 3.840 167,270 $209,088 $209,088 $2.331127 $4,874 $4,874 04519329 Maguire Prtns-Solana Land LP 13.319 580,176 $580,176 $580,176 $2.331127 $13,525 $13,525 40778436 Maguire Prtns-Solana Land LP 3.160 137,650 $172,062 $401 $2.383627 $4,101 $10 40778479 Maguire Prtns-Solana Land LP 4.220 183,823 $229,779 $229,779 $2.383627 $5,477 $5,477 40778497 Maguire Prtns-Solana Land LP 1.500 65.340 $81,675 $81,675 $2.383627 $1,947 $1,947 Tax District Totals: 74.102 3,227,883 $3,984,662 $2,477,579 $93,141 $57,919 Average/Acre $53,773 $33,435 $1,257 $782 Average/SF $1.23 $0.77 $0.03 $0.02 Per Tarrant Appraisal District The total 2014 assessment for these 11 tracts was $3,984,662 or $1.23/square foot based upon the tax district's total assemblage of 74.102 acres. As our valuation is based upon smaller developed sub parcels and not the whole site in its present condition, the current assessments have no bearing. Based upon the 2014 assessments and the 2014 tax rates, the applicable taxes for the subject as 74.059 acres are $93,141 or $1,257/acre ($0.03/SF) based upon the districts land size of 74.059 acres. It is noted, the estimated taxes for the subject's 127 residential lots developed on 12.510 acres within the West Residential Pod and the future 80 lots within the East Residential Pod will be based upon our market value opinions as noted within the discounted cash flow statements within this report. Res 14-45 Exhibit Roll Back Taxes It is also important to note that a portion of the site is presently taxed under an agricultural exemption. As such, under development, the developer of the site is liable for five years of back real estate taxes plus interest annually. This is considered typical of properties located in growth corridors such as the subject and are considered typical for the market. 79 Res 14-45 Exhibit SECTION 5 - HIGHEST AND BEST USE ANALYSIS The principle of highest and best use is defined: Highest and best use is a market-driven concept which identifies the most profitable and competitive use for which a property can be used. It is defined by The Appraisal of Real Estate, Fourteenth Edition (2013) as: The reasonable and probable use of vacant land and or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability. ❖ Permissible Use (Legal) - what uses are permitted by zoning and deed restrictions on the site in question? ❖ Possible Us - to what uses is it physically possible to put the site in question? ❖ Feasible Use - which possible and permissible uses will produce any net return to the owner of the site? ❖ Highest and Best Use - among the feasible uses, which use will produce the highest net return or the highest present worth? The use which is the highest and best use of the property must be physically possible, legally permissible, financially feasible, and maximally productive. Following is a discussion of these factors. Implied within these definitions is recognition of the contribution of that specific use to community environment or to community development goals in addition to wealth maximization of individual property owners. Also implied is that the determination of highest and best use results from the appraiser's judgment and analytical skill, i.e., that the use determined from analysis represents an opinion, not a fact, to be found. In appraisal practice, the concept of highest and best use represents the premise upon which value is based. In the context of most probable selling price (market value) another appropriate term to reflect highest and best use would be most probable use. In the context of investment value an alternative term would be most profitable use. a Res 14-45 Exhibit The highest and best use for unimproved property may be different from the highest and best use of improved property. This will be true when the improvement is not an appropriate use and yet makes a contribution to total property value in excess of the value of the site. Physically Possible The physical aspects of the site dictate the first constraint imposed on the possible use of the property. Size, location within a given block, topography, and availability of utilities are the most important physical determinants of the highest and best use of a site. Furthermore, the subject, with road frontage and visibility along SH -114, Precinct Line Road/Davis Boulevard, and Solana Boulevard and being 85.921 gross acres in size, is sufficient to allow a wide range of development and most allowed uses could be physically placed on the site without any unreasonable hindrance. Legally Permissible Potential legal restrictions that apply to the subject include public (zoning) and private restrictions (deed restrictions, easements, etc.). As discussed, the subject site is zoned under the PD 1- 2 "Planned Development 1, Planning Area 2" by the Town of Westlake. This zoning allows a wide range of uses within a high density environment. Financially Feasible Financially feasible refers to legal uses which are physically possible and have a sufficient demand to produce a positive return. Once the physically possible and legally permissible potential land uses have been determined, the next step in determining the highest and best use is to isolate which uses are economically feasible. As the subject is zoned for mixed -uses and is surrounded by a combination of commercial and multifamily and single-family development, we have obtained historical data pertaining to office, retail, multifamily, and single-family usages as shown in the following charts and data provided by CoStar, Inc., M/PF Research, and Residential Strategies, Inc. Please note that neighborhood boundaries and market type boundaries are not synonymous as they are based on varying criteria. Res 14-45 Exhibit Office — Westlake/Grapevine r� w�nak�a�rai�e Sutrmar�cet w' 4'ESTLAKSIGRAPF'VINE OFFICE Occupancy & Rental Rates 87.5% U' ti 88.0 9h a L c� 85,696 85.4 $25.50 M.DD 524 50 cs w w $24 W 'S23 50 m $2300 84.5% 10 �e 1 t 12 T is 14 $22 517 — OGcupmney Rat* RoMmt Raaf rry ampq�x 7 � �n xwo-an� puska a ,r�4tnr G[w+rt � - x1B63. Res 14-45 Exhibit As can be seen from the previous graph, the occupancy rate for office space within the subject's submarket has increase substantially over the past several years. The occupancy rate for the submarket is currently approximately 87.0%. In conjunction with this rise in occupancy, the average lease rate has also risen over the past several years, with a current average of approximately $25.05/SF which is higher than the past five-year average. As a result, with a rising average occupancy and lease rate, the implied feasibility for new office development was generally considered to be average to good as of the date of valuation. Retail — Trophy Club/Roanoke/Westlake Northwest Fort) Worth Ret, T N,61 114+ 6erion reek A rn � i r, _ I G 774 Trophy Club/Roanoke/ Westlake Ret. •�) M- k l $Fg ke f® �- _ umer La*�� �� le H 7fl i 3 � tail y x, Rd..... I • v r ■ r- JJ y 7 Sou Trophy Club/RoanokeNVestlake Retail Submarket WM CopyngM @ 1997-2006 Co9ta Really irformatim, Ino.Pdl ngNsre—ed Res 14-45 Exhibit Gross Rerd Per 5F 1x25.05 Sia 0' EA4" Buftngs 596 629 Vacancy Rale 1q 04: 144% Fms" SF 10 923,396 tiS,MIM7 `a'aeaw 5r 14 17,987 1,533,328 12 MO C4MVA Sults 237,520 92 759 . vnaahalyp Ralr. 7, 15 H% LJna@r(;angtn,i;bnI 110,127 Q3 Na Available sr 1 875,957 1,788,102 12 Mo Delrverxes 231:11$ 1,3"9-- SuNW5( 26d,05A 969,51" Mmth.n M hIMW.. 1.56 12 G As can be seen from the previous graph, the occupancy rate for office space within the subject's submarket has increase substantially over the past several years. The occupancy rate for the submarket is currently approximately 87.0%. In conjunction with this rise in occupancy, the average lease rate has also risen over the past several years, with a current average of approximately $25.05/SF which is higher than the past five-year average. As a result, with a rising average occupancy and lease rate, the implied feasibility for new office development was generally considered to be average to good as of the date of valuation. Retail — Trophy Club/Roanoke/Westlake Northwest Fort) Worth Ret, T N,61 114+ 6erion reek A rn � i r, _ I G 774 Trophy Club/Roanoke/ Westlake Ret. •�) M- k l $Fg ke f® �- _ umer La*�� �� le H 7fl i 3 � tail y x, Rd..... I • v r ■ r- JJ y 7 Sou Trophy Club/RoanokeNVestlake Retail Submarket WM CopyngM @ 1997-2006 Co9ta Really irformatim, Ino.Pdl ngNsre—ed Res 14-45 Exhibit TROPHY CLUBIROANOKEWE TLAKE RETAIL Occupancy & Rental Rates 101 % 100% 99% 317.89 98 F-.-qUV 8u04nps 97 B5 97% CL 0 ?8% E j6F 1,c=5,M 1,1"..ym 1lacmf! BF 27.1771 94% $18.00 $17.60 $17.40 $16 60 Z aQ $15.50 $15-00 $14.50 93% 10 11 12 13 14 Occupancy Rate ---- Rental Rate 11HU d Thor wp"tFD3 i caiOie with YmnW d Aackbm Cmary erc 11437 As can be seen from the previous graph, the occupancy rate for retail space within the subject's submarket has been relatively stable over the past five years fluctuating between 95% and 99%. The current average occupancy rate is 97.6% which is similar to the five-year average of 97.2%. In response, the average lease rate for retail properties over the past five years has risen dramatically since 2012 and is currently at a four-year high of $17.88/SF. As a result, with a high average occupancy and a rising average lease rate, the implied feasibility for new retail development was generally considered to be average to good as of the date of valuation. Res 14-45 Exhibit NNN Reel Per 5F 317.89 316.41 F-.-qUV 8u04nps 97 B5 V nq'Aq.:110 24% ?8% E j6F 1,c=5,M 1,1"..ym 1lacmf! BF 27.1771 33,687 12. Mo, Ccrnl. SLWC 26555 29.912 AvvivWb"Rate 4_1w 4�% U ndef Ccair3WxgkDns 2?,0SS 14j3LI1 Avzdable4F 66961 5204 17 MQ ddrvmez 51AI4 29.120 5W OL 3F 447 ilk ',tmft m Mw" 18.7 111b As can be seen from the previous graph, the occupancy rate for retail space within the subject's submarket has been relatively stable over the past five years fluctuating between 95% and 99%. The current average occupancy rate is 97.6% which is similar to the five-year average of 97.2%. In response, the average lease rate for retail properties over the past five years has risen dramatically since 2012 and is currently at a four-year high of $17.88/SF. As a result, with a high average occupancy and a rising average lease rate, the implied feasibility for new retail development was generally considered to be average to good as of the date of valuation. Res 14-45 Exhibit Multifamily - Grapevine i MI. Existing Units Sampled Units Percent Sampled SUPPLY and DEMAND SUBMARKET 7,267 7,147 98.3% METRO 171,479 149,145 86.4% Quarterly Supply (units) 0 485 Annual Supply (units) 273 3,216 Annual Inventory Change 3.9% 1.9% Five -Year Average Annua I Supply(units) 192 2,119 Five -Year Peak in Annual Supply (units) 600 4,251 Five-YearTrough in Annual Supply (units) 0 788 Quarterly Demand (units) -42 1,787 Annual Demand (units) 99 3,533 • Current Rate 94.0% 94.2% Quarterly Change -0.6 0.8 Annual Change -2.3 0.3 Five -Year Peak 96.5% 94.2% Five -Yea r Trough 90.8% 88.2% Five -Year Average 94.31'© 92.2% Monthly Rent $1,055 $801 Rent Per Square Foot $1.16,2 $0.936 Quarterly Change 2.7% 2.3% Annual Change 1.414 4.0% Five -Year Peak inAnnual Change 8.8% 4.4% Five-YearTrough in Annual Change -9.2% -3.9% Five -Year Average Annua I Change REVENUE CHANGE 2.1% 1,9% M Res 14-45 Exhibit SUPPLY DETAfLS AND MAP WDO lropwlles CoaW10W In tha'l43al Frwr QL;nraor, L711v+a4pat Drag" Type Un"t StGOIN 5100 Hrnish Sipwm Asir G?. Ca+tr rle. TY 76051 Coritwerial law €7h HaWtiled Real Falale ONAlp a ." r.enlcnol + 1 1W 13r Wil e 1 7 UelQe:°X#S O7 [, �14�#FT i�iort�h laltalna�ienal �mlrporl. ti The Grapevine area apartment market has a substantially higher average rent level of $1,055/month than the average of $801/month for the Metro area. Furthermore, the submarket is currently experiencing one of the highest occupancy rates in the area. The current occupancy rate is 94% with a five-year average increase in rent levels of 2.6%. Thus, new multifamily development is feasible and supported. Res 14-45 Exhibit ejNrl ;d :r v O7 [, �14�#FT i�iort�h laltalna�ienal �mlrporl. ti The Grapevine area apartment market has a substantially higher average rent level of $1,055/month than the average of $801/month for the Metro area. Furthermore, the submarket is currently experiencing one of the highest occupancy rates in the area. The current occupancy rate is 94% with a five-year average increase in rent levels of 2.6%. Thus, new multifamily development is feasible and supported. Res 14-45 Exhibit Single -Family Residential During the past decade, the residential real estate market has seen many positive changes. With the steady increase in multifamily residential rental rates, coupled with the steady decrease in interest rates and the large numbers pertaining to job growth, there has been a trend of individuals choosing to purchase homes rather than to rent apartments and multifamily housing. Furthermore, with the decline in the availability of vacant developable land, population growth has quickly expanded into the suburban areas of the Dallas/Fort Worth area. As such, the proposed absorption of single-family home lots in the subject's neighborhood will be analyzed using historical absorption data provided by Residential Strategies, Inc., a locally recognized information provider, as well as information obtained from area market participants and developers. It is important to note that our absorption data is based on historical trends. Inasmuch as we are forecasting an economy for this area that is at least equal to recent trends, using these historical trends is felt to be quite justifiable. The subject development is physically located within the Town of Westlake in close proximity to Grapevine, Keller, Southlake, and Trophy Club. Therefore, data obtained from Residential Strategies as of Third Quarter 2014 for the combined "Westlake, Grapevine, Keller, Southlake, and Trophy Club" submarkets, which includes the subject, will be analyzed. A summary of the details are as follows: Combined "Westlake, Grapevine, Keller, Southlake, and Trophy Club" Siihmark-atc According to Residential Strategies, Inc., in the combined "Westlake, Grapevine, Keller, Southlake, and Trophy Club" submarkets, According to Residential Strategies for the combined submarkets, 678 homes/lots were absorbed in 2012, increasing to 704 homes lots absorbed in 2012. Absorption continued to increase in 2013 with 704 homes/lots absorbed. Also, Third Quarter 2014 indicates a substantial increase in absorption with 646 homes/lots absorbed (equates to an annual absorption projection of 861 homes/lots). Thus, since 2012 (2.75 years), the annual average of homes/lots absorbed was 737 homes/lots. However, when utilizing a more current 12 -month absorption period (September 2013 thru September 2014), the annual average of homes/lots absorbed increases to 808 homes/lots in this submarket. Following is a chart summarizing the historical lot absorption summary from 2012 through 2014 (annualized) for the combined "Westlake, Grapevine, Keller, Southlake, and Trophy Club" submarkets: Res 14-45 Exhibit Historical Lot Absorption Westlake, Grapevine, Keller,5outhlake, Trophy Club 1000 900 Soo 700 Goo Soft 400 300 200 100 0 2012 2013 Year 2014 *Annualized As shown, the absorption of lots within the combined "Westlake, Grapevine, Keller, Southlake, and Trophy Club" submarkets has been steadily increasing since 2012 and are projected to substantially increase into 2014. According to Residential Strategies, Inc., as of Third Quarter 2014, the existing supply of available housing is currently below above ideal levels in the combined submarkets. The number of vacant developed lots in the combined "Westlake, Grapevine, Keller, Southlake, and Trophy Club" submarkets has increased due to demand from a low of 1,248 lots in Second Quarter 2013 to its current level of 1,364 lots as of Third Quarter 2014. Based upon the Residential Strategies, Inc. absorption figures of the past 2.75 years, there is currently a 22± -month (1,364 lots - 737 lots = 1.9± -years) total supply of existing lots available in the combined submarkets. This total supply is considered to be slightly below the lower end of the optimum supply range of 2.0 to 2.5 years. However, when utilizing the more current 12 -month absorption average of 808 home/lots (September 2013 thru September 2014), the total supply of existing lots available in the subject's market decreases significantly to only 20± -months (1,364 lots - 808 lots/year = 1.7± -years), which is also significantly below the lower end of the optimum supply level of existing lots in the combined market areas. Res 14-45 Exhibit Thus, the total lot supply within the combined "Westlake, Grapevine, Keller, Southlake, and Trophy Club" submarkets is estimated to be between 1.7± to 1.9± years. Currently, this total lot supply is considered to be below optimum supply levels. In addition, taking into consideration that new developments require a typical 12 -month construction period, with increasing demand and dwindling lot supply, it appears that additional lot product in the combined "Westlake, Grapevine, Keller, Southlake, and Trophy Club" submarkets is feasible at the current time. Having determined the feasibility of new lot construction in the subject's submarket, our residential analysis will now narrow to specific competing subdivisions in the Dallas/Fort Worth area with somewhat similar attributes relative to the subject. As discussed, the subject's proposed residential lots are to be developed within a master -planned community designed as a small European Village Center which is atypical of current subdivision developments in the Dallas/Fort Worth area. Furthermore, to attain this "vogue" style, typical lot setbacks (front, side, and rear) are not required. As such, to determine a projected absorption for the subject's proposed lots, which are to be developed with varying lot dimensions and ranging in size from 2,250 square feet to 5,625 square feet with an overall average lot size of 3,505 square feet, lots in developments with greater dimensions (vet with setbacks) and with similar home price ranges will be utilized. *We will utilize this absorption analysis to project the absorption of the subject's future East Residential Pod which is planned for completion in April 2017 with 80 residential lots similar in attributes relative to the West Residential Pod lots. EM Res 14-45 Exhibit Subject Summary - West Residential Pod As discussed, the subject represents the following proposed lots within the West Residential Pod of a master -planned development known as Westlake Entrada: Westlake Entrada. West Residential Pod Total Lot Size Total Lots (SF) SF 48 2,625 126,000 21 3,126 65,646 5 2,375 11,875 4 2,250 9,000 1 3,745 3,745 2 4,220 8,440 4 5,026 20,104 1 2,804 2,804 4 4,813 19,252 1 4,975 4,975 2 5,564 11,128 7 4,944 34,608 3 5,089 15,267 1 3,386 3,386 4 2,500 10,000 1 5,419 5,419 4 5,625 22,500 14 5,066 70,924 12Z 23.552 445,073 AYg� 3.505 Subject Summary - Future East Residential Pod As discussed, the subject also represents the following future proposed lots planned within the East Residential Pod of the Westlake Entrada development. These lots are projected to be completed in April 2017. Res 14-45 Exhibit Westlake Entrada - East Residential Pod Total Lot Size Total Lots (SF) SF 9 2,375 21,375 26 2,625 68,250 1 2,804 2,804 19 3,126 59,394 1 3,745 3,745 3 4.220 12.660 4 4,944 19,776 1 4,975 4,975 3 5,026 15,078 8 5,066 40,528 3 5,250 15,750 1 5,419 5,419 1 5,089 5,089 0 54.664 2ZA&43 3" The following subdivisions presented for comparison are believed to more accurately reflect the potential demand/absorption for the subject's 127 proposed lots within the West Residential Pod as well as the 80 future lots within the East Residential Pod. The similarities considered to be most important are lot size, home price range, and amenity features. Thus, the tables that follow detail only the active subdivisions that are considered to conceivably compete with the subject's proposed lots. Competitive Supply As discussed, the subject is located within the Town of Westlake in Tarrant County, Texas and represents 127 proposed single-family lots in the West Residential Pod which are planned to be developed with lot sizes ranging 2,250 square feet to 5,625 square feet with varying lot dimensions (overall average lot size of 3,505 square feet). Also, the subject's future lots within the East Residential Pod are also planned with similar lot sizes with an overall average of 3,436 SF. Furthermore, home prices are projected to range from $550,000 to $1,000,000. As such, the comparables presented are believed to accurately reflect the potential demand/absorption for the subject's proposed lots. The similarities considered to be most important are lot size, home price range, and amenity features. The tables that follow detail the active subdivisions that are considered to compete with the subject's 127 proposed residential lots in the West Residential Pod and the future 80 lots in the East Residential Pod per Residential Strategies, Inc. as of Third Quarter 2014 and developers. 91 Res 14-45 Exhibit TH Subdivisions Shady Oaks Phases 1A, 2A, 26, 2C, 2F, 2G, & 3 Lewisville, Texas Carillon Phases 1A, 2A, 3A, 4,413, 4C, 5A, 567 & 5C Southlake, Texas Vaquero Westlake, Texas Lakes of Las Colinas Irving -Las Colinas, Texas Avignon Windhaven Phases 1, 2, & 3 Plano, Texas Lone Star Ranch (Preserve) Frisco, Texas Newman Village, Phase 2B Frisco, Texas COMPETITIVE SUPPLY Home Prices Typical Typical 000's Available Lots* Lot Dimensions Lot SF $667-$1,995 41 100'x 1407150' 14,000-15,000 125'x 160' 20,000 $500-$910 230 47750'x 110' 5,170-5,500 65'x 120' 7,800 70'/90'x 130' 9,100-11,700 100'x 13571407150' 13,500-14,000-15,000 120'x 1907200' 22,800-24,000 $980-$4,000 74 80'x 180' 14,400 220'x 220' 48,400 $533-$897 35 55'x 110' 6,050 60'x 115' 6,900 80790'x 125' 10,000-11,250 $570-$840 11 75'x 75' 5,625 80'x 80' 6,400 75'x 130' 9,750 $510-$613 40 60'x 115' 6,900 $591-$809 51 69'x 130' 80'/90'x 140' Phillips Creek Ranch $512-$733 28 75'x 1207125' Riverton & Sheridan 84'x 120' TOTAL �1Q *Source: Residential Strategies, Inc. as of Third Quarter 2014 Subject: 127Proposed Lots, West Residential Pod; 2,250- 5,625 (3,505 SFAvg.) Subject: 80 Future Lots, East Residential Pod; 2,375 - 5,419 (3,436 SFAvg.) 8,970 11,200-12,600 9,000-9,375 10,080 The competitive supply presented above recognizes eight subdivisions which are located in the surrounding Dallas/Fort Worth area with similar demographics relative to the subject. The lot sizes, home prices, and amenities in the subdivisions shown are somewhat similar relative to the subject, as proposed. Thus, the eight subdivisions are considered to be the immediate competition for the subject's proposed lots and are believed to accurately reflect the potential absorption levels for the subject's lots at this time. Having addressed the immediate competition, we will determine the approximate absorption time frame for the subject by analyzing absorption trends of the previously shown developments. 92 Res 14-45 Exhibit Absorption Analysis The following table outlines the monthly absorption of the eight subdivisions listed in the competitive supply. It should be noted that all data is as of Third Quarter 2014. MONTHLY ABSORPTION PERFORMANCE Available Building No. Units/ Months Subdivisions Lots Starts* Months Month Supply Shady Oaks 41 66 21 3.1 13.2 Carillon 230 173 33 5.2 44.2 Vaquero 74 40 21 1.9 38.9 Lakes of Las Colinas 35 142 33 4.3 8.1 Avignon Windhaven 11 129 33 3.9 2.8 Lone Star Ranch (Preserve) 40 29 6 4.8 8.3 Newman Village, Phase 2B 51 45 6 7.5 6.8 Phillips Creek Ranch 28 147 21 7_0 4_0 TOTALS/AVERAGE ZZ1 3= ]-3& AVERAGE UNITS/MONTH 42 *Source: Residential Strategies, Inc. as of Third Quarter 2014 Subject: 127 Proposed Lots, West Residential Pod; 2,250- 5,625 (3,505 SFAvg.) ,Subject: 80 Future Lots, East Residential Pod; 2,375 - 5,419 3,436 SF Av . Based on the number of available lots and average absorption per month, the 510 lots remaining within the eight subdivisions shown indicate only a 13.5± -month supply (1.1± years). This appears to be representative of a substantial under -supply of lots within the subject's projected price/lot size range. Additionally, it is also important to note that at the absorption rates presented, six of the eight subdivisions shown are projected to be sold out within approximately 13.2± months near the projected substantial completion of the subject's lots, as proposed (September 2015). Thus, it is reasonable that the subject, upon development within 10 months, may capture a portion of the demand that these projects currently enjoy. Overall, the eight subdivisions shown indicate an absorption range of 1.9 units to 7.5 units per month, with an overall average of 4.7 units per month. In summary, it is important to note the following facts: ➢ The total lot supply within the combined "Westlake, Grapevine, Keller, Southlake, and Trophy Club" submarkets is estimated to be between 1.7± to 1.9± years which is below equilibrium levels of 2.0 to 2.5 years. ➢ The subject's competitive supply is considerable under -supplied with only a 13.5± -month lot supply (1.1± years). 93 Res 14-45 Exhibit Six of the eight subdivisions shown are projected to be sold out within approximately 13.2± months near the projected substantial completion of the subject's lots, as proposed (10 months). Absorption Projection — West Residential Pod Based upon the preceding, we have projected a laddered absorption on a quarterly basis beginning at 4.0 units per month within the first two quarterly periods, increasing to 5.0 units per month in the third and fourth quarterly periods, increasing to 6.0 units per month in the fifth and sixth quarterly periods, and finally increasing to 7.0 units per month thereafter. Our absorption projection is slightly above the overall average of the competitive supply (4.7 upm), yet is considered reasonable with dwindling lot supplies in the subject's immediate area as well as the lack of lots with the unique qualities of the subject lots as proposed. Following is a summary of our quarterly absorption projection: PROJECTED QUARTERLY LOT ABSORPTION SUMMARY Sep -15 Dec -15 Mar -16 I Jun -16 Sep -16 Dec -18 Jul -18 Jan -19 23.3± Months # OF LOTS 1 12 1 12 1 15 1 15 1 18 1 181211 16 127 Lots Thus, the overall absorption projection for the subject's 127 proposed single-family lots within Westlake Entrada, Phase I is estimated to be 23.3± months, or 1.9± years (overall average of 5.5 upm). Our absorption projection is considered reasonable based upon the comparables utilized. Absorption Proiection — Future East Residential Pod Based upon the preceding, we have projected a laddered absorption on a quarterly basis beginning at 4.0 units per month within the first two quarterly periods, increasing to 5.0 units per month in the third and fourth quarterly periods, increasing to 6.0 units per month thereafter for the 80 lots planned within the future East Residential Pod. Our absorption projection (4.9 upm) is slightly above the overall average of the competitive supply (4.7 upm), yet is considered reasonable with dwindling lot supplies and the unique qualities of the subject, as proposed. Following is a summary of our quarterly absorption projection beginning in April 2017, the expected completion date of the future lots within the East Residential Pod: PROJECTED QUARTERLY LOT ABSORPTION SUMMARY Apr -17 Jul -17 I Oct -17 I Jan -18 Apr -18 I Jul -18 16.3± Months # OF LOTS 1 12 12 1 15 1 15 1 18 1 8 1 80 Lots Res 14-45 Exhibit Thus, the overall absorption for the subject's 80 proposed single-family lots within the future Westlake Entrada, East Residential Pod is estimated to be 16.3± months, or 1.4± years (overall average of 4.9 upm). Our absorption projection is considered reasonable based upon the comparables utilized. Highest and Best Use Summary The neighborhood should continue to exhibit moderate growth due to residential demand within the area created by the existence of major employers located in close proximity. New residential development with supportive commercial development should continue to grow with the increase in population and economic growth. As discussed, the subject is located in a developing area and is not limited by its shape, location, and size. As such, it is our opinion that the highest and best use of the subject is to be utilized for mixed-use development. 95 Res 14-45 Exhibit SECTION 6 - VALUATION OF THE SUBJECT The valuation process is defined as: "The systematic set of procedures an appraiser follows to provide answers to a client's questions about real property value." 3 Valuation is a term used interchangeably with appraisal. Real estate markets are a function of the location in which they are located. The overall market environment can have a profound effect on the manner in which buyer's and sellers perform the act of transferring property rights. Considerations made by the participants are generally based on certain fundamental principles. Those principles and their definitions are as follows: Anticipation: "The perception that value is created by the expectation of benefits to be derived in the future. Value is created by the anticipation of future benefits. Change: The result of the cause and effect relationship among the forces that influence real property value. Supply and Demand: In economic theory, the principle of supply and demand states that the price of a commodity, good, or service varies directly, but not necessarily proportionately, with demand and inversely, but not necessarily proportionately with supply. Thus, an increase in the supply of an item or decrease in the demand for an item tends to reduce the equilibrium price; the opposite conditions produce an opposite effect. The relationship between supply and demand may not be directly proportional, but the interaction of these forces is fundamental to economic theory. The interaction of suppliers and demanders, or sellers and buyer's, constitutes a market. Competition: Between purchasers or tenants, the interactive efforts of two or more potential buyer's or tenants to make a sale or secure a lease; between sellers or landlords, the interactive efforts of two or more potential sellers or landlords to complete a sale or lease; among competitive properties, the level of productivity and amenities or benefits characteristic of each property considering the advantageous or disadvantageous position of the property relative to the competitors. Substitution: The appraisal principle that states that when several similar or commensurate commodities, goods, or services are available, the one with the lowest price attracts the greatest demand and widest distribution. This is the primary principle upon which the cost and sales comparison approaches are based. 3 The Appraisal of Real Estate, 14th Edition, the Appraisal Institute, Chicago, Illinois (U.S., 2013) 11 Res 14-45 Exhibit Balance: The principle that real property value is created and sustained when contrasting, opposing, or interacting elements are in a state of equilibrium. Contribution: The concept that the value of a particular component is measured in terms of its contribution to the value of the whole property or as the amount that its absence would detract from the value of the whole. Surplus Productivity: The net income that remains after the cost of various agents of production has been paid. Conformity: The appraisal principle that real property value is created and sustained when the characteristics of a property conform to the demands of its market. Externalities: The principle economies outside a property have a positive effect on its value while diseconomies outside a property have a negative effect upon its value."4 The Cost Approach, wherein the land is appraised as if vacant and available for development to its highest and best use. To this result is added the improvements estimated cost of reproduction new less depreciation accruing from all causes. The Income Approach, which requires a study of the earnings capacity of the real estate, and the conversion of such net income into value by means of a capitalization process. The Sales Comparison Approach, involving an analysis of the sale of other property having similar attributes and/or improvements, and a comparison of such data with the property appraised, giving due consideration to the elements of dissimilarity. Historical Background: "The appraisal procedures that are now identified as the three approaches to value were developed after the stock market crash of 1929. The economic crisis that ensued had an immediate impact on the appraisal practices of the time. The collapse of the real estate market in the 1930s seemed to discredit the notion that market price is central to value".5 There are several accepted methods which can be used to provide an opinion of the value of land. However, only the Sales Comparison Approach is considered to be applicable in this instance. The Sales Comparison Approach is a method that involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sales prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. "The Appraisal of Real Estate, 14th Edition, the Appraisal Institute, Chicago, Illinois (U.S., 2013) e Ibid. 97 Res 14-45 Exhibit SUMMARY OF VALUATION TECHNIQUES There are several accepted methods that can be used to value land. For the valuation of the subject pods we have utilized two approaches to value, the Sales Comparison Approach and the Lot Development Approach. The Sales Comparison Approach will be utilized for the valuation of the 31 mixed-use pods as well as to value the subject's 127 proposed lots within the West Residential Pod as well as the 80 future lots planned as the East Residential Pod. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. Under the Lot Development Approach, the subject is assumed to be developed into a subdivision, with the individual lots being sold over a projected period of time. Expenses that are incurred are deducted from the proceeds of the lot sales and the resulting income stream is discounted into a present value. This will be utilized for the value of the 127 proposed lots within the West Residential Pod that are projected to be complete on the date of valuation. In addition, we have utilized this approach to value the East Residential Pod due to the lack of similar zoned vacant land tracts that have the same zoning allowance as this pod. The following sections provide the rationale and assumptions inherent in the Sales Comparison Approach as well as the Lot Development Approach. As discussed, we will utilize the Sales Comparison Approach to value the 31 mixed-use pods while we will use the Lot Development Approach to value to provide a bulk or wholesale value for the subject's 127 proposed lots within the West Residential Pod, as well as the value of the East Residential Pod which is platted for 80 future lots and is projected for completion in April 2017. It is noted that the 31 mixed-use pods have a very unique zoning in that they allow for a substantially higher density of development than any other parcels found in the suburban communities of the Dallas/Fort Worth Market area. As such, a typical valuation utilizing the sales price per square foot of land does not properly account for this superior and unique zoning. In response, the appraisers have valued the 31 mixed- use pods based on the exhibits provided that show the building size allowable in conjunction with the individual pods location, land size and potential highest and best use. This valuation technique utilizes the sales prices of properties located in the general market area and converts them to a price per square foot building space planned or constructed rather than to a per square foot of land size. This comparison is considered to more accurately represent a buyer's motivation for the subject properties. am Res 14-45 Exhibit For example, if a 15,000 square foot suburban building (Pod 27A) would require a land size of approximately 60,000 to 75,000 square feet, with a land cost of $20.00 to $25.00 per square foot, the total land cost would range from $1,200,000 to $1,875,000 which translates to a cost to the building of $80.00 to $125.00 per square foot. In Entrada, because of the lack of building setbacks, site coverage ratios, on site storm retention and/or landscaping requirements, as well as the fact that a large portion of the parking is being provided via parking structures and/or shared parking areas, a site size of only 22,500 is required. Thus, it is our opinion that a purchaser would pay the same total cost for the smaller site within Entrada as they would the larger site in another location as the net cost per buildable square foot would be the same. Furthermore, overall site costs within Entrada are expected to be lower because of the site improvements created by the PID development. Thus, a site within Entrada that would allow a similar building size will sell for the same the same $1,200,000 to $1,875,000 as a comparable suburban location, or $53.33 to $83.33 per square foot. The comparables presented herein are all user sites in which we have been able to verify the building sized planned or constructed. The 31 pods are subdivided into three distinct highest and best use groupings. They are retail, office, and institutional/multi- family (including hotel/motel, assisted living nursing home and apartment/condominiums). All of these comparables are in the subject's general market area. Res 14-45 Exhibit The following summarizes the pertinent information for the 31 mixed-use pods. SUMMARY OF PODS - ENTRADA Parcel No. Block Phvsical Location Land/Gross Acres Land/Gross SF Max Buildina Size in SF Highest and Best Use West H, I, J, L, N1, O North side of Solana Boulevard 12.51 544,855 127 lots Residential East E South side of Ciudad Real, east of Santilla del Mar 9.49 413,240 80 lots Residential 1 A SEQ SH 114 and Davis Boulevard 0.29 12,600 6,000 Retail 2 A SEQ SH 114 and Davis Boulevard 1.93 84,000 112,000 Office 3 B E/Q Santilla del Mar and Eche 0.86 37,500 25,000 Retail 4 B DO Santilla del Mar and fiche 1.41 61,360 47,200 Retail 5 B E/Q Santilla del Mar and Bche 1.52 66,000 44,000 Office 6 B South & west side Santilla del Mar at Fondon 0.48 21,000 14,000 Retail 7 B W/Q Fondon and Bche 1.95 85,000 N/A Public Parking Garage 8 B S/S Eche, northeast of Santilla del Mar 0.19 8,250 7,500 Office 9 C NEQ Fondon and Eche 0.51 22,220 20,200 Retail 10 C NEQ Fondon and Eche 2.94 127,888 61,500 Institutional 11 C NEQ Fondon and Eche 0.86 37,400 33,312 Institutional / Condos 12 D S/S Fondon, east of Eche 0.20 8,700 5,800 Retail 13A D FJQ Fondon and Bche 1.33 58,110 29,800 Retail 13B D HQ Fondon and Eche Included in 13A Included in 13A 22,509 Condos 14 D EC Santilla del Mar and Fondon 0.75 32,850 21,900 Retail 15A D EIS Santilla del Mar, north of Ciudad Real 1.03 45,000 30,000 Retail 15B D FJS Santilla del Mar, north of Ciudad Real Included in 15A Included in 15A 10,004 Condos 16 D East of Ciudad Real roundabout, east of future Luarca 1.14 49,500 33,000 Institutional 17 D WS Ciudad Real roundabout, east of future Luarca 0.76 33,000 22,000 Tow n Hall 18A D ITS Ciudad Real roundabout, east of future Luarca 1.30 56,700 37,800 Office 18B D WS Qudad Real roundabout, east of future Luarca Included in 18A Included in 18A 60,024 Condos 19A D WS Ciudad Real roundabout at future Luarca 1.79 78,000 48,000 Office 19B D WS Ciudad Real roundabout at future Luarca Included in 19A Included in 19A 86,424 Condos 20 F SEC Santilla del Mar and Galisteo 0.83 36,250 25,000 Office 21 F NWC Santilla del Mar and Ciudad Real 2.01 87,500 97,000 Institutional 22 F NEC Santilla del Mar and Qudad Real 2.01 87,500 97,000 Institutional 23 F WC Ciudad Real and Galisteo 2.23 97,312 231,600 Institutional 24 1 NEC Davis Boulevard and Santilla del Mar 0.17 7,500 2,100 Office 25A N SEC Davis Boulevard and Santilla del Mar 0.62 27,000 18,000 Retail 25B N SEC Davis Boulevard and Santilla del Mar Included in 25A Included in 25A 30,012 Condos 26A N EIC Davis Boulevard and Sloane Boulevard 0.41 18,000 6,000 Retail 26B N FJC Davis Boulevard and Sloana Boulevard Included in 26A Included in 26A 15,006 Condos 27A N EJC Davis Boulevard and Sloana Boulevard 0.52 22,500 15,000 Retail 27B N F/C Davis Boulevard and Sloana Boulevard Included in 27A Included in 27A 43,212 Condos 28 O South end of Arta, south of Santilla del Mar 1.18 51,412 11,000 Retail 29 Q SEQ SH 114 and Davis Boulevard 0.99 42,960 17,900 Retail 30A Q SEQ SH 114 and Davis Boulevard 0.34 14,694 36,000 Office 30B Q SEQ SH 114 and Davis Boulevard Included in 30A Included in 30A 32,400 Condos 31 R N/S Eche, east of Santilla del Mar 1.24 54,000 36,000 Office 100 Res 14-45 Exhibit VALUATION OF POD 1 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject's highest and best use, our emphasis is placed on commercial -zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. SUMMARY OF LAND SALES Comp Date of Size of No. Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard 1/7/2014 PD 126,100 $58.33 and N Kimball Avenue, Southlake, Texas 2 Southeast side of E Southlake Boulevard, 5/21/13 0-1 12,500 $104.00 west of Miron Drive, Southlake, Texas 3 Southwest corner of E Southlake Boulevard 10/26/2012 SP -1 12,000 $133.33 and S Nolen Drive, Southlake, Texas 4 North of SH 114 and west of N Kimball Pending SP -2 4,000 $145.38 Avenue, Southlake, Texas Subject Pod 1 Village 6,000 SEQ SH 114 and Davis Boulevard PD/Retail The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 101 Res 14-45 Exhibit P COMPARABLE LAND SALES MAP Trophy Club Park 'D Iz tz S Harmony pa " k + M F- Trophy HOME- o r X" FIIVa.� . `6 Westlake =. E Bob Pnes - P21 Bob Jones Meaclowmere Park Park Bob Junes Pm* ('D U) z -4: 0 (D 1709 'A 19313 W Continental Blvd colle Ville ji 'f -1 1' W F lower Mound G r a P e V i J7 0 � a k e Burney Lft=Ji Lakeview Park J-1 q I Fo* Kimbrillt R rnj T=alk; bb rc Grapevine s. z E Highland St cove Rd (T MSP hiamo, Park U;56 E SVVakeW co L'cf X -�1 r-3 nI DFW 26 Airport O'j5Wg. Dr 102 Res 14-45 Exhibit Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Land Sales 0% 0°% 0% 0o% Financing Terms Subject Sale #1 Sale #2 Sale #3 Sale #4 Pod 1 Southwest corner of E Southeast side of E Southwest corner of E North of SH 114 and SEQ SH 114 and Davis Southlake Boulevard Southlake Boulevard, Southlake Boulevard west of N Kimball Location: Boulevard and N Kimball Avenue, west of Miron Drive, and S Nolen Drive, Avenue, Southlake, Southlake, Texas Southlake, Texas Southlake, Texas Texas N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Sale/List Price: Zoning/Use Village PD/Retail PD 0-1 SP -1 SP -2 Sale Date: _ N/A 1/7/2014 5/21/13 _ 10/26/2012 Pending Buildina Size: 6.000 126.100 12.500 12.000 4.000 Sales Adjustment Sale #1 Sale #2 Sale #3 Sale #4 Carried Forward Price/SF $ 58.33 $ 104.00 $ 133.33 $ 145.38 Property Rights Conveyed 0% 0°% 0% 0o% Financing Terms 0% 0°% 0% 0°% Conditions of Sale 0% 0% 0% 0°% Market Conditions 0% 0°% 0% 0°% Ad' Price/SF $ 58.33 $ 104.00 $ 133.33 $ 145.38 Other Adjustments: Location 0°% 10°% -20°% 0% Size 100% 10°% 10% -10% Site Utility 0% 0°% 0% 0% Zoning 0% 0% 0% 0% Net Other Adjustments 100% 20% -10% -10% Final Adjusted Price/SF $ 116.67 $ 124.80 $ 120.00 $ 130.84 Jackson Clabom, Inc. 103 Res 14-45 Exhibit Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non -corner location on E. Southlake Boulevard. In addition, this site is slightly larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $104.00 to $133.33 per square foot of building space. The middle to upper end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach 6,000 $116.67 $700,016 6,000 I $130.84 I $785,060 Subject Total Square Feet of Building 6,000 X Adjusted Value/SF $125.00 Value Indication By Market Approach: $750,000 Jackson Claborn, Inc. Based on the preceding, our opinion of value for Pod 1 is $750,000, or $125.00 per square foot of allowed building space which translates to a value of $59.52 per square foot of land. 104 Res 14-45 Exhibit VALUATION OF POD 2 - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject's highest and best use, our emphasis is placed on commercial -zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. SUMMARY OF LAND SALES Comp Date of Size of No. Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Pending SP -2 110,000 $26.56 Avenue, Southlake, Texas 2 East side of Merlot Avenue, south of 3/11/2013 Office 62,704 $28.65 Hughes Road, Grapevine, Texas 3 Southwest corner of SH 114 and N White 1/1/2014 SP -2 73,000 $49.25 Chapel Boulevard, Southlake, Texas 4 East side of Cherry Lane, north of SH 114, 8/8/2014 0-1 12,000 $51.67 Southlake, Texas 5 Southeast corner of E Southlake Boulevard 8/27/2014 C-1 18,000 $87.22 and Westwood Drive, Southlake, Texas Subject Pod 2 Village 112,000 SEQ SH 114 and Davis Boulevard PD/Retail The five comparables utilized ranged in sale price from $26.56 to $87.22 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 105 Res 14-45 Exhibit COMPARABLE LAND SALES MAP HarTprly Park 'pres E Bob Trophy Club Moadowmere 1*4 V Park ,mWav IS.UBJE... .- - Bob Jumer. Park 4MCDO. Westlake— VV Dov lei < Flower Mooed4- Murrell Pas% GrapoWne Lake Lig -_ gurney Ln A 4 LakPevlew ' '! ia rk 911 d - Fox Paas < 4- -- 0. Oak Grove 2 01-0 Pickafmg Park Park " C5A?q DGYP (;r-ossqng Park in z Horseslae Trails Park 11111111111k E Highland St Dove Rd '114 McPherson C Park + 'i3 r . ke B lvd 1709 Southlake, Bran B � OE Saiuf%k 114dI icentennial + e6tage Park f -L rn- 2 26 J� > W COntinental BlvidPld U a Pan Ve 41 <11 Keller 7, oostang 0 ,,..DrW Airport 3029 North Richland Hills —.6 Hail Johnson Rd rl L +0 hes Rd 106 Res 14-45 Exhibit Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Land Sales Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Pod 2 SEQ SH 114 and Location: Davis Boulevard Sale/List Rice: N/A Zoning/Use Village PD/Retail Sale Date: N/A Building Size: 112,000 North of SH 114 and w est of N Kimball Avenue, Southlake, Texas $2,922,005 SP -2 Pending 110,000 East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas $1,796,755 Office 3/11/2013 62,704 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas $3,595,192 SP -2 1/1/2014 73,000 East side of Cherry Lane, north of SH 114, Southlake, Texas $620,000 0-1 8/8/2014 12,000 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas $1,570,000 C-1 8/27/2014 18,000 Price/SF WA $26.56 $28.65 $49.25 $51.67 $87.22 Sales Adjustment Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Carried Forward Rice/SF $ 26.56 $ 28.65 $ 49.25 $ 51.67 $ 87.22 Property Rights Conveyed Financing Terms Conditions of Sale Market Conditions 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Ad' Price/SF $ 26.56 $ 28.65 $ 49.25 $ 51.67 $ 87.22 Other Adjustments: Location Size Site Utility Zoning 20% 0% 0% 0% 25% -20% 0% 0% -10% -20% 0% 0% 20% -50% 0% 0% -20% -40% 0% 0% Net Other Adjustments 20% 5% -30% -30% -60% Final Adjusted Price/SF $ 31.88 $ 30.09 $ 34.47 $ 36.17 $ 34.89 Jackson Claborn, Inc. Sale No. 1 is located southeast of the subject, north of SH -114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to its lack of direct visibility to either of its road access points. However, this site is similar in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered inferior in location due to its non -corner location and minor corner road frontage. However, this site is small/superior in overall building size. This site is generally similar in all other respects. 107 Res 14-45 Exhibit Sale No. 3 is located southeast of the subject at the southwest corner of SH -114 and N. White Chapel Boulevard, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. This site is also smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east side of Cherry Lane, north of SH -114 in Southlake, Texas. This site is considered inferior in location due to its lack of direct highway exposure. However, this site is substantially smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and Westwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is substantially smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $30.09 to $36.17 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach 112,000 $30.09 $3,369,775 112,000 I $36.17 I $4,050,667 Subject Total Square Feet of Building 112,000 X Adjusted Value/SF I $31.25 Value Indication By M arket Approach: $3,500,000 Jackson Claborn, Inc. Based on the preceding, our opinion of value for Pod 2 is $3,500,000, or $31.25 per square foot of allowed building space which translates to a value of $41.67 per square foot of land. M Res 14-45 Exhibit VALUATION OF POD 3 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject's highest and best use, our emphasis is placed on commercial -zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. SUMMARY OF LAND SALES Comp Date of Size of No. Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard 1/7/2014 PD 126,100 $58.33 and N Kimball Avenue, Southlake, Texas 2 Southeast side of E Southlake Boulevard, 5/21/13 0-1 12,500 $104.00 west of Miron Drive, Southlake, Texas 3 Southwest corner of E Southlake Boulevard 10/26/2012 SP -1 12,000 $133.33 and S Nolen Drive, Southlake, Texas 4 North of SH 114 and west of N Kimball Pending SP -2 4,000 $145.38 Avenue, Southlake, Texas Subject Pod 3 Village 25,000 E/Q Santilla del Mar and Elche PD/Retail The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 109 Res 14-45 Exhibit FA COMPARABLE LAND SALES MAP Tf ophy CI u b Park T -I cr- P 26 '�Pnes 13 E Bob Trophy Club Bob Jones Park Meadowmere Park ,tSUBJE... Bob Jones Pa;k 0 4151 IN Soothlake 131A 1709 13 J=—Q 77 VV Continental Blvd colleyville n n F Flower Mound lqj,'�j"A GrapLt-v) - ne L a k e Lakeview Park Fol, < Kimball Rd oa z Grapevine E Highland St Z� oove 3 Rd (n -�T > u P E Southtak E SOW'qjk DFW AirpGrt ,7�-73 0,�sVang Dr 110 Res 14-45 Exhibit Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Land Sales 0% 0°% 0% 0o% Financing Terms Subject Sale #1 Sale #2 Sale #3 Sale #4 Pod 3 Southwest corner of E Southeast side of E Southwest corner of E North of SH 114 and E/Q Santilla del Mar Southlake Boulevard Southlake Boulevard, Southlake Boulevard west of N Kimball Location: and Elche and N Kimball Avenue, west of Miron Drive, and S Nolen Drive, Avenue, Southlake, Southlake, Texas Southlake, Texas Southlake, Texas Texas N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Sale/List Price: Zoning/Use Village PD/Retail PD 0-1 SP -1 SP -2 Sale Date: _ N/A 1/7/2014 5/21/13 _ 10/26/2012 Pending Buildina Size: 25.000 126.100 12.500 12.000 4.000 Sales Adjustment Sale #1 Sale #2 Sale #3 Sale #4 Carried Forward Price/SF $ 58.33 $ 104.00 $ 133.33 $ 145.38 Property Rights Conveyed 0% 0°% 0% 0o% Financing Terms 0% 0°% 0% 0°% Conditions of Sale 0% 0% 0% 0°% Market Conditions 0% 0°% 0% 0°% Ad' Price/SF $ 58.33 $ 104.00 $ 133.33 $ 145.38 Other Adjustments: Location 0°% 10°% -20°% 0% Size 50% -30°% -30°% -50% Site Utility 0°% 0°% 0% 0% Zoning 0% 0% 0% 0% Net Other Adjustments 50% -20% -50% -50% Final Adjusted Price/SF $ 87.50 $ 83.20 $ 66.67 $ 72.69 Jackson Clabom, Inc. Res 14-45 Exhibit Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non -corner location on E. Southlake Boulevard. In addition, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH -114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $66.67 to $87.50 per square foot of building space. The middle to upper end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach 25,000 $66.67 $1,666,667 25,000 I $87.50 I $2,187,550 Subject Total Square Feet of Building 25,000 X Adjusted Value/SF $80.00 Value Indication By Market Approach: $2,000,000 Jackson Claborn, Inc. Based on the preceding, our opinion of value for Pod 3 is $2,000,000, or $80.00 per square foot of allowed building space which translates to a value of $53.33 per square foot of land. 112 Res 14-45 Exhibit VALUATION OF POD 4 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject's highest and best use, our emphasis is placed on commercial -zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. SUMMARY OF LAND SALES Comp Date of Size of No. Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard 1/7/2014 PD 126,100 $58.33 and N Kimball Avenue, Southlake, Texas 2 Southeast side of E Southlake Boulevard, 5/21/13 0-1 12,500 $104.00 west of Miron Drive, Southlake, Texas 3 Southwest corner of E Southlake Boulevard 10/26/2012 SP -1 12,000 $133.33 and S Nolen Drive, Southlake, Texas 4 North of SH 114 and west of N Kimball Pending SP -2 4,000 $145.38 Avenue, Southlake, Texas Subject Pod 4 Village 47,200 E/Q Santilla del Mar and Elche PD/Retail The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 113 Res 14-45 Exhibit FA COMPARABLE LAND SALES MAP Tf ophy CI u b Park T -I cr- P 26 '�Pnes 13 E Bob Trophy Club Bob Jones Park Meadowmere Park ,tSUBJE... Bob Jones Pa;k 0 4151 IN Soothlake 131A 1709 13 J=—Q 77 VV Continental Blvd colleyville n n F Flower Mound lqj,'�j"A GrapLt-v) - ne L a k e Lakeview Park Fol, < Kimball Rd oa z Grapevine E Highland St Z� oove 3 Rd (n -�T > u P E Southtak E SOW'qjk DFW AirpGrt ,7�-73 0,�sVang Dr 114 Res 14-45 Exhibit Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Land Sales 0% 0°% 0% 0o% Financing Terms Subject Sale #1 Sale #2 Sale #3 Sale #4 Pod 4 Southwest corner of E Southeast side of E Southwest corner of E North of SH 114 and E/Q Santilla del Mar Southlake Boulevard Southlake Boulevard, Southlake Boulevard west of N Kimball Location: and Elche and N Kimball Avenue, west of Miron Drive, and S Nolen Drive, Avenue, Southlake, Southlake, Texas Southlake, Texas Southlake, Texas Texas N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Sale/List Price: Zoning/Use Village PD/Retail PD 0-1 SP -1 SP -2 Sale Date: _ N/A 1/7/2014 5/21/13 _ 10/26/2012 Pending Buildina Size: 47.200 126.100 12.500 12.000 4.000 Sales Adjustment Sale #1 Sale #2 Sale #3 Sale #4 Carried Forward Price/SF $ 58.33 $ 104.00 $ 133.33 $ 145.38 Property Rights Conveyed 0% 0°% 0% 0o% Financing Terms 0% 0°% 0% 0°% Conditions of Sale 0% 0% 0% 0°% Market Conditions 0% 0°% 0% 0°% Ad' Price/SF $ 58.33 $ 104.00 $ 133.33 $ 145.38 Other Adjustments: Location 0°% 10°% -20°% 0% Size 30% -40% -40°% -60% Site Utility 0% 0°% 0% 0% Zoning 0% 0% 0% 0% Net Other Adjustments 30% -30% -60% -60% Final Adjusted Price/SF $ 75.84 $ 72.80 $ 53.33 $ 58.15 Jackson Clabom, Inc. 115 Res 14-45 Exhibit Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non -corner location on E. Southlake Boulevard. In addition, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH -114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $53.33 to $75.84 per square foot of building space. The middle to upper end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach 47,200 $53.33 $2,517,333 47,200 I $75.84 I $3,579,414 Subject Total Square Feet of Building 47,200 X Adjusted Value/SF $63.56 Value Indication By Market Approach: $3,000,000 Jackson Claborn, Inc. Based on the preceding, our opinion of value for Pod 4 is $3,000,000, or $63.56 per square foot of allowed building space which translates to a value of $65.19 per square foot of land. 116 Res 14-45 Exhibit VALUATION OF POD 5 - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject's highest and best use, our emphasis is placed on commercial -zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. SUMMARY OF LAND SALES Comp Date of Size of No. Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Pending SP -2 110,000 $26.56 Avenue, Southlake, Texas 2 East side of Merlot Avenue, south of Hughes 3/11/2013 Office 62,704 $28.65 Road, Grapevine, Texas 3 Southwest corner of SH 114 and N White 1/1/2014 SP -2 73,000 $49.25 Chapel Boulevard, Southlake, Texas 4 East side of Cherry Lane, north of SH 114, 8/8/2014 0-1 12,000 $51.67 Southlake, Texas 5 Southeast corner of E Southlake Boulevard 8/27/2014 C-1 18,000 $87.22 and Westwood Drive, Southlake, Texas Subject Pod 5 Village 44,000 E/Q Santilla del Mar and Elche PD/Retail The five comparables utilized ranged in sale price from $26.56 to $87.22 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 117 Res 14-45 Exhibit COMPARABLE LAND SALES MAP HarTprly Park 'pres E Bob Trophy Club Moadowmere 1*4 V Park ,mWav IS.UBJE... .- - Bob Jumer. Park 4MCDO. Westlake— VV Dov lei < Flower Mooed4- Murrell Pas% GrapoWne Lake Lig -_ gurney Ln A 4 LakPevlew ' '! ia rk 911 d - Fox Paas < 4- -- 0. Oak Grove 2 01-0 Pickafmg Park Park " C5A?q DGYP (;r-ossqng Park in z Horseslae Trails Park 11111111111k E Highland St Dove Rd '114 McPherson C Park + 'i3 r . ke B lvd 1709 Southlake, Bran B � OE Saiuf%k 114dI icentennial + e6tage Park f -L rn- 2 26 J� > W COntinental BlvidPld U a Pan Ve 41 <11 Keller 7, oostang 0 ,,..DrW Airport 3029 North Richland Hills —.6 Hail Johnson Rd rl L +0 hes Rd 118 Res 14-45 Exhibit Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Land Sales Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Pod 5 E/Q Santilla del Mar Location: and Elche Sale/List Price: N/A Zoning/Use Village PD/Retail Sale Date: N/A Building Size: 44,000 North of SH 114 and west of N Kimball Avenue, Southlake, Texas $2,922,005 SP -2 Pending 110,000 East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas $1,796,755 Office 3/11/2013 62,704 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas $3,595,192 SP -2 1/1/2014 73,000 East side of Cherry Lane, north of SH 114, Southlake, Texas $620,000 0-1 8/8/2014 12,000 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas $1,570,000 C-1 8/27/2014 18,000 Price/SF N/A $26.56 $28.65 $49.25 $51.67 $87.22 Sales Adjustment Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Carried Forward Price/SF $ 26.56 $ 28.65 $ 49.25 $ 51.67 $ 87.22 Property Rights Conveyed Financing Terms Conditions of Sale Market Conditions 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Adj Price/SF $ 26.56 $ 28.65 $ 49.25 $ 51.67 $ 87.22 Other Adjustments: Location Size Site Utility Zoning 10% 30% 0% 0% 25% 10% 0% 0% -10% 10% 0% 0% 0% -20% 0% 0% -20% -20% 0% 0% Net Other Adjustments 40% 35% 0% -20% -40% Final Adjusted Price/SF $ 37.19 $ 38.68 $ 49.25 $ 41.33 $ 52.33 Jackson Clabom, Inc. Sale No. 1 is located southeast of the subject, north of SH -114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to its lack of direct visibility to either of its road access points. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered inferior in location due to its non -corner location and minor corner road frontage. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. 119 Res 14-45 Exhibit Sale No. 3 is located southeast of the subject at the southwest corner of SH -114 and N. White Chapel Road, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east side of Cherry Lane, north of SH -114 in Southlake, Texas. This site is considered inferior in location due to its lack of direct highway exposure. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and Westwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $37.19 to $52.33 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach 44,000 $37.19 $1,636,323 44,000 I $52.33 I $2,302,667 Subject Total Square Feet of Building 44,000 X Adjusted Value/SF I $45.45 Value Indication By Market Approach: F $2,000,000 Jackson Claborn, Inc. Based on the preceding, our opinion of value for Pod 5 is $2,000,000, or $45.45 per square foot of allowed building space which translates to a value of $30.30 per square foot of land. 120 Res 14-45 Exhibit VALUATION OF POD 6 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject's highest and best use, our emphasis is placed on commercial -zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. SUMMARY OF LAND SALES Comp Date of Size of No. Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard 1/7/2014 PD 126,100 $58.33 and N Kimball Avenue, Southlake, Texas 2 Southeast side of E Southlake Boulevard, 5/21/13 0-1 12,500 $104.00 west of Miron Drive, Southlake, Texas 3 Southwest corner of E Southlake Boulevard 10/26/2012 SP -1 12,000 $133.33 and S Nolen Drive, Southlake, Texas 4 North of SH 114 and west of N Kimball Pending SP -2 4,000 $145.38 Avenue, Southlake, Texas Subject Pod 6 Village 14,000 South & west side Santilla del Mar at Fondon PD/Retail The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 121 Res 14-45 Exhibit FA COMPARABLE LAND SALES MAP Tf ophy CI u b Park T -I cr- P 26 '�Pnes 13 E Bob Trophy Club Bob Jones Park Meadowmere Park ,tSUBJE... Bob Jones Pa;k 0 4151 IN Soothlake 131A 1709 13 J=—Q 77 VV Continental Blvd colleyville n n F Flower Mound lqj,'�j"A GrapLt-v) - ne L a k e Lakeview Park Fol, < Kimball Rd oa z Grapevine E Highland St Z� oove 3 Rd (n -�T > u P E Southtak E SOW'qjk DFW AirpGrt ,7�-73 0,�sVang Dr 122 Res 14-45 Exhibit Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Land Sales 0% 0°% 0% 0o% Financing Terms Subject Sale #1 Sale #2 Sale #3 Sale #4 Pod 6 Southwest corner of E Southeast side of E Southwest corner of E North of SH 114 and South & west side Southlake Boulevard Southlake Boulevard, Southlake Boulevard west of N Kimball Location: Santilla del Mar at and N Kimball Avenue, west of Miron Drive, and S Nolen Drive, Avenue, Southlake, Fondon Southlake, Texas Southlake, Texas Southlake, Texas Texas N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Sale/List Price: Zoning/Use Village PD/Retail PD 0-1 _ SP -1 SP -2 Sale Date: _ N/A 1/7/2014 5/21/13 10/26/2012 Pending Buildina Size: 14.000 126.100 12.500 12.000 4.000 Sales Adjustment Sale #1 Sale #2 Sale #3 Sale #4 Carried Forward Price/SF $ 58.33 $ 104.00 $ 133.33 $ 145.38 Property Rights Conveyed 0% 0°% 0% 0o% Financing Terms 0% 0°% 0% 0°% Conditions of Sale 0% 0% 0% 0°% Market Conditions 0% 0°% 0% 0°% Ad' Price/SF $ 58.33 $ 104.00 $ 133.33 $ 145.38 Other Adjustments: Location 0°% 10°% -20°% 0% Size 80% 0°% 0% -20% Site Utility 0% 0°% 0% 0% Zoning 0% 0% 0% 0% Net Other Adjustments 80% 10% -20% -20% Final Adjusted Price/SF $ 105.00 $ 114.40 $ 106.67 $ 116.31 Jackson Clabom, Inc. 123 Res 14-45 Exhibit Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non -corner location on E. Southlake Boulevard. However, this site is generally similar in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is generally similar in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH -114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $105.00 to $116.31 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach 14,000 $105.00 $1,470,033 14,000 I $116.31 I $1,628,273 Subject Total Square Feet of Building 14,000 X Adjusted Value/SF $107.14 Value Indication By Market Approach: $1,500,000 Jackson Claborn, Inc. Based on the preceding, our opinion of value for Pod 6 is $1,500,000, or $107.14 per square foot of allowed building space which translates to a value of $71.43 per square foot of land. 124 Res 14-45 Exhibit VALUATION OF POD 8 - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject's highest and best use, our emphasis is placed on commercial -zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. SUMMARY OF LAND SALES Comp Date of Size of No. Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Pending SP -2 110,000 $26.56 Avenue, Southlake, Texas 2 East side of Merlot Avenue, south of Hughes 3/11/2013 Office 62,704 $28.65 Road, Grapevine, Texas 3 Southwest corner of SH 114 and N White 1/1/2014 SP -2 73,000 $49.25 Chapel Boulevard, Southlake, Texas 4 East side of Cherry Lane, north of SH 114, 8/8/2014 0-1 12,000 $51.67 Southlake, Texas 5 Southeast corner of E Southlake Boulevard 8/27/2014 C-1 18,000 $87.22 and Westwood Drive, Southlake, Texas Subject Pod 8 Village 7,500 S/S Elche, northeast of Santilla del Mar PD/Retail The five comparables utilized ranged in sale price from $26.56 to $87.22 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 125 Res 14-45 Exhibit COMPARABLE LAND SALES MAP HarTprly Park 'pres E Bob Trophy Club Moadowmere 1*4 V Park ,mWav IS.UBJE... .- - Bob Jumer. Park 4MCDO. Westlake— VV Dov lei < Flower Mooed4- Murrell Pas% GrapoWne Lake Lig -_ gurney Ln A 4 LakPevlew ' '! ia rk 911 d - Fox Paas < 4- -- 0. Oak Grove 2 01-0 Pickafmg Park Park " C5A?q DGYP (;r-ossqng Park in z Horseslae Trails Park 11111111111k E Highland St Dove Rd '114 McPherson C Park + 'i3 r . ke B lvd 1709 Southlake, Bran B � OE Saiuf%k 114dI icentennial + e6tage Park f -L rn- 2 26 J� > W COntinental BlvidPld U a Pan Ve 41 <11 Keller 7, oostang 0 ,,..DrW Airport 3029 North Richland Hills —.6 Hail Johnson Rd rl L +0 hes Rd 126 Res 14-45 Exhibit Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Land Sales Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Pod 8 S/S Elche, northeast of Location: Santilla del Mar Sale/List Price: N/A Zoning/Use Village PD/Retail Sale Date: N/A Building Size: 7,500 North of SH 114 and west of N Kimball Avenue, Southlake, Texas $2,922,005 SP -2 Pending 110,000 East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas $1,796,755 Office 3/11/2013 62,704 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas $3,595,192 SP -2 1/1/2014 73,000 East side of Cherry Lane, north of SH 114, Southlake, Texas $620,000 0-1 8/8/2014 12,000 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas $1,570,000 C-1 8/27/2014 18,000 Price/SF NIA $26.56 $28.65 $49.25 $51.67 $87.22 Sales Adjustment Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Carried Forward Price/SF $ 26.56 $ 28.65 $ 49.25 $ 51.67 $ 87.22 Property Rights Conveyed Financing Terms Conditions of Sale Market Conditions 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Adj Price/SF $ 26.56 $ 28.65 $ 49.25 $ 51.67 $ 87.22 Other Adjustments: Location Size Site Utility Zoning 10% 150% 0% 0% 25% 100% 0% 0% -10% 100% 0% 0% 0% 20% 0% 0% -20% 20% 0% 0% Net Other Adjustments 160% 125% 90% 20% 0% Final Adjusted Price/SF $ 69.07 $ 64.47 $ 93.57 $ 62.00 $ 87.22 Jackson Clabom, Inc. Sale No. 1 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to its lack of direct visibility to either of its road access points. In addition, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered inferior in location due to its non -corner location and minor corner road frontage. In addition, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. 127 Res 14-45 Exhibit Sale No. 3 is located southeast of the subject at the southwest corner of SH 114 and N. White Chapel Road, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east side of Cherry Lane, north of SH 114 in Southlake, Texas. This site is considered somewhat similar in location due to its lack of direct highway exposure. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and Westwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $62.00 to $93.57 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach 7,500 $62.00 $465,000 7,500 I $93.57 I $701,801 Subject Total Square Feet of Building 7,500 X Adjusted Value/SF I $66.67 Value Indication By Market Approach: $500,000 Jackson Claborn, Inc. Based on the preceding, our opinion of value for Pod 8 is $500,000, or $66.67 per square foot of allowed building space which translates to a value of $60.61 per square foot of land. 128 Res 14-45 Exhibit VALUATION OF POD 9 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject's highest and best use, our emphasis is placed on commercial -zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 129 Res 14-45 Exhibit SUMMARY OF LAND SALES Comp Date of Size of No. Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard 1/7/2014 PD 126,100 $58.33 and N Kimball Avenue, Southlake, Texas 2 Southeast side of E Southlake Boulevard, 5/21/13 0-1 12,500 $104.00 west of Miron Drive, Southlake, Texas 3 Southwest corner of E Southlake Boulevard 10/26/2012 SP -1 12,000 $133.33 and S Nolen Drive, Southlake, Texas 4 North of SH 114 and west of N Kimball Pending SP -2 4,000 $145.38 Avenue, Southlake, Texas Subject Pod 9 Village 20,200 NEQ Fondon and Elche PD/Retail The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 129 Res 14-45 Exhibit FA COMPARABLE LAND SALES MAP Tf ophy CI u b Park T -I cr- P 26 '�Pnes 13 E Bob Trophy Club Bob Jones Park Meadowmere Park ,tSUBJE... Bob Jones Pa;k 0 4151 IN Soothlake 131A 1709 13 J=—Q 77 VV Continental Blvd colleyville n n F Flower Mound lqj,'�j"A GrapLt-v) - ne L a k e Lakeview Park Fol, < Kimball Rd oa z Grapevine E Highland St Z� oove 3 Rd (n -�T > u P E Southtak E SOW'qjk DFW AirpGrt ,7�-73 0,�sVang Dr 130 Res 14-45 Exhibit Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Land Sales Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sales Adjustment Sale #1 Sale #2 Sale #3 Sale #4 Carried Forward Price/SF $ 58.33 $ 104.00 $ 133.33 $ 145.38 Property Rights Conveyed Subject Sale #1 Sale #2 Sale #3 Sale #4 0°% Pod 9 Southwest corner of E Southeast side of E Southwest corner of E North of SH 114 and Market Conditions NEO Fondon and Southlake Boulevard Southlake Boulevard, Southlake Boulevard west of N Kimball Location: Elche and N Kimball Avenue, west of Miron Drive, and S Nolen Drive, Avenue, Southlake, -50% Southlake, Texas Southlake, Texas Southlake, Texas Texas N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Sale/List Price: Zoning/Use Village PD/Retail PD 0-1 SP -1 SP -2 Sale Date: Building Size: N/A 20,200 1/7/2014 126,100 5/21/13 12,500 _ _ 10/26/2012 12,000 Pending 4,000 Property Rights Conveyed 0% 0°% 0% 0o% Financing Terms 0% 0°% 0% 0°% Conditions of Sale 0% 0% 0% 0°% Market Conditions 0% 0% 0% 0°% Ad' Price/SF $ 58.33 $ 104.00 $ 133.33 $ 145.38 Other Adjustments: Location 0°% 10°% -20°% 0% Size 50% -30% -30% -50% Site Utility 0% 0°% 0% 0% Zoning 0% 0% 0% 0% Net Other Adjustments 50% -20% -50% -50% Final Adjusted Price/SF $ 87.50 $ 83.20 $ 66.67 $ 72.69 Jackson Clabom, Inc. 131 Res 14-45 Exhibit Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non -corner location on E. Southlake Boulevard. In addition, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH -114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $66.67 to $87.50 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach 20,200 $66.67 $1,346,667 20,200 I $87.50 I $1,767,540 Subject Total Square Feet of Building 20,200 X Adjusted Value/SF $66.83 Value Indication By Market Approach: $1,350,000 Jackson Claborn, Inc. Based on the preceding, our opinion of value for Pod 9 is $1,350,000, or $66.83 per square foot of allowed building space which translates to a value of $60.76 square foot of land. 132 Res 14-45 Exhibit VALUATION OF POD 10 - INSTITUTIONAL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject's highest and best use, our emphasis is placed on commercial -zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. SUMMARY OF LAND SALES Comp Date of Size of No. Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Pending NR -PUD 277,150 $12.63 Lane, Southlake, Texas 2 Southeast corner of Park Avenue and 3rd 6/6/2014 CBD 309,498 $14.54 Avenue, Flower Mound, Texas 3 North of SH 114 and west of N Kimball 5/29/2014 SP -2 118,000 $22.03 Avenue, Southlake, Texas 4 West side of SH 121, south of Gateway 9/4/2014 CC -2 45,000 $28.24 Drive, Colleyville, Texas Subject Pod 10 Village 61,500 NEQ Fondon and Elche PD/Retail The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 133 Res 14-45 Exhibit Trophy Club Park I rothy Club Park, Harmo-qy Pa- T&phy Club COMPARABLE LAND SALES MAP Bab Jones Park 2499 0 Rockledge 4 P. 0 WestlakelD aney Ln Lakeview Park Park .4 W < E Meadomnere Park Dove park f m Je JD"�VG Rd DA Grube Park,—,p 0 + 26 S i lVer Perk 14 1 ?Dcj Sevthlak6 114 Grapevine Pni k a� He .,gel- Daflas Rd W Continental elvd. Old Union- ElU r jr 121 17 Wstariq or T� Fokindi2f5 PlaZa 933' 215 L) DFW Airport Kimzey r. IA ry P 4 q arT Ln U) 4b 7 3029 Dallas -Feat Worth Dransfuird n ternat.ional. Airpol yur Noirth Hall, jOinsQr) Rd hire W LUM AN 3126 Richland 4- +ughEs Rd Hills Reagan Park. Minters; Cha llil#IDW Glade Rd Glade Rd . 134 Res 14-45 Exhibit i_one Tree Foirk spring 1171 Mia1�doibPaTk + Flower AhouTd. Flow Stone Creek Park sce Wichita Trail LL -4 ,cu,,,, Or rt 7' 7, `01-41r" Culwelli Park 4- + V.fv � rA L-1 1 Spinks Rd Murrell Park 1ceside Ffwy Gar apevineLara 2499 0 Rockledge 4 P. 0 WestlakelD aney Ln Lakeview Park Park .4 W < E Meadomnere Park Dove park f m Je JD"�VG Rd DA Grube Park,—,p 0 + 26 S i lVer Perk 14 1 ?Dcj Sevthlak6 114 Grapevine Pni k a� He .,gel- Daflas Rd W Continental elvd. Old Union- ElU r jr 121 17 Wstariq or T� Fokindi2f5 PlaZa 933' 215 L) DFW Airport Kimzey r. IA ry P 4 q arT Ln U) 4b 7 3029 Dallas -Feat Worth Dransfuird n ternat.ional. Airpol yur Noirth Hall, jOinsQr) Rd hire W LUM AN 3126 Richland 4- +ughEs Rd Hills Reagan Park. Minters; Cha llil#IDW Glade Rd Glade Rd . 134 Res 14-45 Exhibit Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Land Sales Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sales Adjustment Sale #1 Sale #2 Sale #3 Sale #4 Carried Forward Price/SF $ 12.63 $ 14.54 $ 22.03 $ 28.24 Property Rights Conveyed Subject Sale #1 Sale #2 Sale #3 Sale #4 0°% Pod 10 Northeast corner of SH Southeast co