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HomeMy WebLinkAboutRes 2003-10RESOLUTION NO. 2003 -010 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, ADOPTING THE TOWN OF FOUNTAIN HILLS COMMUNITY FACILITIES DISTRICTS POLICY. WHEREAS, the Mayor and Council of the Town of Fountain Hills (the "Town Council ") has determined that it is in the best interests of the citizens of the Town of Fountain Hills (the "Town ") to establish written policies that ensure a consistent procedure for the Town Council to evaluate a request for formation of a community facilities district ( "CFD "); and WHEREAS, the existence of such written policies will guide the Town Council and the Town staff in (i) evaluating the relative costs, benefits and risks of a proposed CFD, (ii) ensuring conformance with existing Town plans and (iii) establishing application procedures. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA as follows: SECTION 1. That the "Town of Fountain Hills Community Facilities District Policy" is hereby adopted in the form attached hereto as Exhibit A and incorporated herein by reference. SECTION 2. That the Town Manager is hereby authorized and directed to take all steps necessary to ensure that the Town of Fountain Hills Community Facilities District Policy is implemented and applied to all requests for formation of a CFD. PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, Arizona, March 20, 2003. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: Tim G. Pickering, Town Manager 9196001\ .12003.10 - M.Pohcy.rccdoc 3- 14 -03 -1 C- - aoend- r, Town APP VED AS TO FORM: C An w J. McGuire, Town Attorney TOWN OF FOUNTAIN HILLS, ARIZONA POLICY GUIDELINES AND APPLICATION PROCEDURES FOR THE ESTABLISHMENT OF COMMUNITY FACILITIES DISTRICTS In order to secure for the Town of Fountain Hills, Arizona (the "Town ") the benefits of the Community Facilities Act (the "Act ") enacted by the Arizona Legislature in 1988 and to promote the best interests of the Town, the following Community Facilities Districts Policy Guidelines and Application Procedures (this "Policy ") is hereby adopted by the Mayor and Council of the Town (the "Town Council "). A community facilities district ( "CFD ") provides a funding mechanism to finance construction, acquisition, operation and maintenance of public infrastructure that benefits the real property comprising the CFD and its ultimate users. The Town Council recognizes the ability of the CID to allow the construction and/or acquisition of infrastructure that might otherwise not be provided. Because a CFD is an entirely separate political subdivision of the State located within the boundaries of the Town, the Town Council believes that the formation of the CFD should be entered into carefully, to ensure its lasting success. Therefore, the Town Council has established the following Policy to create a uniform process for formation of CFDs within the corporate boundaries of the Town. ARTICLE 1. General Policies 1.1. CFDs should be utilized primarily in connection with the financing of infrastructure for development of substantial (i) residential projects, (ii) master planned communities or (iii) commercial development. 1.2 Special consideration should be given to CFDs that provide an enhanced level of infrastructure amenities and/or municipal services. Any public infrastructure financed by a CFD should be in conformance with the Town's General Plan in order to encourage orderly growth and development. 1.3 All costs incurred by the Town and/or the CFD in connection with the CFD application, formation and administration and operation expenses appurtenant thereto, will be paid by the applicant/landowner (the "Applicant ") through a series of monetary deposits as provided herein. These deposits shall be applied to payments for services rendered by the Town staff, CFD staff and services rendered by outside consultants who may be retained by the Town and/or the CFD, including but not limited to attorneys, financial advisors, engineers and appraisers. The Town may use outside consultants as "staff' to review or confirm any analyses prepared in conjunction with an application or financing of the CFD. If the Town or CFD uses outside consultants as "staff', such as attorneys or engineers, those consultants will also be paid their customary rate for services. If authorized by the CFD board of directors, exercising its sole discretion, all or part of such costs may be reimbursed to the Applicant from a CFD tax levy, CFD assessments, CFD revenues or CFD bond proceeds, provided such reimbursement is in conformance with federal law, state law and these guidelines. 1.4 The Town will encourage an area to be governed by as few CFDs as possible, and a preference will be given to one master CFD for a single development. This policy is adopted to facilitate ease of administration and to create the largest tax /revenue base possible. The decision to form a CFD shall be determined by the Town Council exercising its sole and absolute discretion. 1.5 Unless otherwise agreed to by the Town Council, and pursuant to state statutes, the CFD will be governed by a seven - member board of directors (the "CFD Board ") comprised of the seven members of the Town Council. The day -to -day administrative responsibilities of the CFD will be performed pursuant to a contract by outside personnel or by the Town staff. The Town will determine that adequate safeguards and controls are in place to ensure the soundness of any CFD financing program, as well as the adequacy and legality of the legal proceedings and disclosure documents in connection with any financing. At the option of the CFD Board and with approval by the Town Council, advisory committees may be utilized. 1.6 Unless otherwise agreed to by the Town, the CFD must be self- supporting from the standpoint of financing, operations and maintenance. Town funds shall not be used for any CFD purposes. Notwithstanding anything contained in this Policy, the property, the full faith and credit or the taxing power of the Town shall not be pledged to the payment of any CFD obligation or indebtedness. 1.7 After review of the project feasibility report, property appraisals and other required pertinent information, the CFD Board will determine, in its sole and absolute discretion, the amount, timing and form of financing to be used by a CFD. 1.8 All public infrastructure constructed or acquired by the CFD shall adhere to the statutory public procurement procedures in accordance with applicable laws, rules and regulations. 1.9 The CFD will not use bond proceeds or other CFD funds to purchase from Applicant requesting CFD financing any public rights -of -way or other real property to be used for public infrastructure improvements if such real property would be required to be dedicated and conveyed to the Town by the Applicant upon development of the Applicant's property. 1.10 Unless otherwise agreed to by the Town, all costs of administration and operation of the CFD and the operation and maintenance of public infrastructure in the CFD, including replacement reserves as appropriate, shall be the responsibility of the CFD, the Applicant, 2 applicable homeowners associations, or any combination of the foregoing, as may be acceptable to the Town and the CFD Board. 1.11 This Policy maybe modified from time to time by the Town. Any Applicant will be given the opportunity to propose alternative approaches to those provided herein, with the understanding that concerns of the Town must be adequately addressed before the staff of the Town will recommend approval of a CFD to the Town Council. ARTICLE 2. Content of Application An application for the formation of a CFD (the "Application ") must be completed prior to any determination that a CFD will be formed. The Application shall be submitted to the Town's Director of Public Works. The Application shall, at a minimum, contain the following information and be organized in the manner described below. Applicant Information 2.1 Applicant Information. A general description of the Applicant, including its corporate and organizational structure. This description should also include the names of all officers and/or corporate directors directly related to or associated with the proposed development and the proposed CFD. 2.2 Applicant Contact. The name, address, phone number and other relevant information of the primary contact for the Applicant. This information should also list the names (and other relevant information) of any legal representatives, engineers, architects, financial consultants and/or other consultants significantly involved in the Application. 2.3 Experience. A general description of the Applicant's experience with similar types of projects, including a detailed description of the Applicant's professional experience. 2.4 Financial Capability. A description of the proposed equity contribution from the applicant/landowner and a calendar showing the timing and sources of such equity contribution. Evidence demonstrating Applicant's financial capacity to undertake the development associated with the public infrastructure and private development (including financial statements if necessary). Proposed CFD and Project Description 2.5 General Description. The Application shall provide a general description of the CFD, its purpose, proposed improvements and/or services to be provided and a statement describing the overall community benefit or enhanced public services to be derived from the CFD. This description should also include a statement of how the proposed CFD meets the existing development objectives of the Town, including the degree to which the CFD is consistent with the goals of the Town's General Plan for promoting orderly development, 3 consistent with growth management policies and zoning requirements and the degree to which the land use plan for the CFD is consistent with the Town's General Plan. 2.6 Location. The Applicant shall provide a description of the proposed CFD's general location within the Town, including an area site map illustrating the proposed boundaries and a legal description of the proposed boundaries. This description must include an analysis of the appropriateness of the CFD boundaries. 2.7 Ownership Interests. The Applicant shall provide the identity and address of all persons or entities with any interest in the property, including lienholders and purchasers under pending sales contracts, and the names and addresses of any qualified electors located within the proposed boundaries of the CFD. A current title report and certificate from the Maricopa County Elections Department shall be submitted as evidence of names or persons with any interest in the land and qualified electors, respectively. Proposed Improvements 2.8 Description of Project. The Application shall contain a detailed description of the types of public infrastructure to be financed and/or acquired by the CFD. 2.9 Estimated Costs. The Application shall provide an estimate of the construction and/or acquisition costs of the public infrastructure to be completed by the CFD. This information shall include a detailed list of the estimated cost of each component of the public improvements. 2.10 Development Timetable. A detailed timetable describing the scheduling, timing or phasing of the improvements shall be provided in the Application. This schedule should include a timetable for constructing/acquiring both the public and private components of the overall development. Each phase of the development should be shown separately. Additionally, the Applicant shall be encouraged to submit a timetable showing the project schedule if a CFD is not formed. Financing Plan 2.11 Description of Financial Plan. The Application shall include a detailed description of the capital financing plan for the public infrastructure and the private development, including both public and private components of the development including both capital and operating/maintenance costs. This description should include the proposed types of tax - exempt/taxable bonds to be issued for the public improvements as well as the financing plan of the Applicant for the private developments and the sources of the proposed financing of debt or equity. 2.12 Sources and Uses of Funds. The Application shall include a detailed sources and uses of funds for the public improvements. This schedule should include the description of components of the public improvements that will be financed by the type of bond to be issued. 4 2.13 Financial Feasibility. The Application should include a 20 -year financial feasibility study for the entire project including both the public infrastructure and the private development. This feasibility study should include: a. A market absorption study for the private development in the CFD prepared by an independent consultant acceptable to the Town. Such study shall include estimates of the revenue to be generated by the development and an estimate of the ability of the market to absorb the development as well as a market absorption calendar for the private development. b. A financing plan for the private development in the CFD. 2.14 Fiscal Impact. The Application shall provide an analysis of how the proposed debt financing, operation and maintenance costs, user charges and other CFD costs will impact the ultimate end users of the property, specifically projected property taxes and property tax rates, special assessments, fees, charges and other costs that would be borne by owners /residents /users in the CFD. The analysis should also address the impact these costs will have on the marketability of the private development. A comparative analysis of such taxes, assessments and fees of similar or adjoining areas and/or CFDs should also be provided. 2.15 Value -to -Lien Ratio Analysis. Based on the estimated value of the property within the development, including the acquisition and/or construction of the public improvements within the CFD, the Application shall include an analysis of the value -to -lien ratios of the proposed public financing. 2.16 Operation and Maintenance Costs. The Application shall provide a detailed description and a financial pro -forma of the estimated annual operation and maintenance cost of the public infrastructure along with the governmental approvals that will be required for both the public and private improvements to be constructed and operated. The Application must clearly detail the specific entities such as CFD, Homeowners Associations, Applicant, Town, etc. that will be responsible for funding the on -going operation and maintenance costs for all CFD improvements. This section should also provide a description of the revenue source of such operations. A description of the proposed equity contribution from the applicant/landowner and a calendar showing the timing and sources of such equity contribution shall also be included. Miscellaneous Information 2.17 Marketing Plan. The Application shall provide a detailed description of the proposed marketing plan to be used by the Applicant to market the property within the CFD. This information may include comparisons of the proposed CFD to similar CFDs in the area. 2.18 Disclosure to Prospective Property Owners. The Application shall include information regarding the proposed disclosure forms that will be used to describe to prospective buyers the potential tax, assessment and fee implications of the CFD (the "CFD Disclosure Form "). The CFD Disclosure Form shall include provisions requiring the signed Ca".1 acknowledgement of receipt by all buyers of property within the CFD. The Applicant and any 5 subsequent developer /builder shall explain, in their promotional materials, the expected and 4 possible tax, assessment and other financial burdens of the CFD to prospective CFD landowners. The Applicant shall record the CFD Disclosure Form in the office of the Maricopa County Recorder, including an accurate legal description of the real property contained within the boundaries of the CFD. The recorded CFD Disclosure Form shall contain a clear, unambiguous statement that, upon each sale of property in the CFD, the Applicant, developer/builder or any future land owner shall file with the Town Clerk and the CFD District Clerk (if different from the Town Clerk) at the close of escrow, a copy of the CFD Disclosure Form, signed by the purchaser. 2.19 Operating Plan. The Application shall include an operating plan for the CFD, describing the functions of the CFD and how the operation and maintenance of the infrastructure and any other services will be provided. 2.20 Development Agreements. The Application shall include (as an Appendix) any development agreements entered into between the Town and the Applicant relating to the proposed development within the CFD. ARTICLE 3. Application Review Procedures 3.1 Ten copies of the Application shall be submitted to the Town Public Works Director who will coordinate an inter - departmental analysis of the Application. Within a reasonable time after receipt of the Application, the Town Public Works Director shall provide the Applicant with a schedule of the review and approval process. 3.2 At the time of submission of the Application, the Applicant shall pay a non- refundable application fee of $20,000 and shall deposit an additional $50,000 on account with the Town Finance Department (the "Review Fee ") to be applied by the Town in its sole discretion to the costs incurred in connection with processing and reviewing the Application and the formation and administration of the CFD. When $25,000 of the Review Fee (and each subsequent $25,000 amount hereinafter described) has been expended, an accounting will be made to the Applicant for all costs incurred by the Town and Applicant shall deposit an additional $25,000 as part of the Review Fee. 3.3 After the application fee and deposit are submitted, the Accounting Supervisor shall arrange a pre- review conference with the appropriate Town staff, for the purpose of reviewing the Application for conformity with Town policies. 3.4 If, following the pre- review conference or any other time during the Application process Town staff requests additional information, the Applicant shall provide any and all supplemental information requested prior to proceeding to the next step of the review process. 3.5 The review, analysis and implementation of an Application will be generally conducted in four sequential phases. 0 C� a. Phase 1 will consist of a preliminary review of the Application to identify missing or incomplete information and to identify and discuss any initial concerns prior to the Town undertaking a more complete review of the Application. b. Phase 2 will consist of a detailed review of the Application as amended. The review will include, but will not be limited to, examining the project feasibility, financing analyses and evaluation of community benefits. This phase may include several iterations of review, comment and re- review. Under the direction of the Accounting Supervisor, a report may be prepared including recommendations related to the CFD and an analysis of the impact of the formation of the CFD and its effects on the Town. This report may provide a recommended disposition of the Application and any additional requirements that will be placed on the Applicant, developer /landowner, builder and/or the CFD. C. Phase 3, if undertaken, will consist of the planning, development, creation, financing and bond issuance for the CFD. d. Phase 4, if necessary, will consist of the continuing administration, oversight and management of the CID. 3.6 Except as set forth herein with respect to ongoing operation and maintenance costs which will be paid by the CFD in the future, all costs must be paid by the Applicant and received by the Town at least 14 days prior to the date of the Town Council meeting at which the Application is to be considered. If the Application meets the qualifications provided herein, the Application, along with any report and recommendations by Town staff, will be forwarded to the Town Council. 3.7 If the Town Council approves an Application for formation of a CID, the Applicant and the staff of the Town shall coordinate a schedule of events for formation of the CFD. Prior to formation of the CFD the Applicant and the Town shall enter into a development agreement incorporating the requirements of any report, recommendations of the Town staff relating to such CFD, the requirements of these policy guidelines and any other restrictions, provisions and agreements required by the Town. 3.8 If the Town Council approves the formation of a CFD and there are existing agreements with the Applicant and/or any other developers /landowners for the provision of infrastructure proposed to be furnished by the CFD, then those agreements will be amended to reflect the agreements and conditions pertaining to the CID. The amendments will reflect that such infrastructure improvements will be provided (including by acquisition) by either the Applicant, developer /landowner or the CFD. ARTICLE 4. CFD Operations and Debt Financing 4.1 Upon formation of a CFD the Applicant shall deposit with the CFD a nonrefundable start-up fee of $10,000 and an additional $25,000 as a deposit on account for ongoing administrative expenses. The administrative expense fee shall be applied by the CFD to the costs and expenses incurred in connection with administration, operation and maintenance of the CFD or its public improvements. These deposits shall be applied to payments for services rendered by the Town staff, CFD staff, if any, and services rendered by outside consultants who may be retained by the Town and/or the CFD, including but not limited to attorneys, financial advisors, engineers and appraisers. From time to time, upon depletion of the administrative expense fee, the CFD may request, and the Applicant shall promptly deposit with the CFD, additional $25,000 deposits to be applied to the purposes contemplated in this Section 4.1. 4.2 In order to provide for the CFD to be self- supporting for its administrative, operation and maintenance expenses the Town and the CFD, unless otherwise agreed, will require the imposition of a $0.30 per $100 of assessed value ad valorem tax upon the CFD taxable property. Failure to agree to impose any necessary tax for the operation and maintenance of the CFD will relieve the Town and the CFD from undertaking any obligations or operations. 4.3 In connection with any request for debt financing, the Applicant will provide a current appraisal of the fair cash market value of the property within the proposed CFD that is to be taxed or assessed, prepared by a person who is designated as a Member Appraisal Institute ( "MAI ") and a certified general real estate appraiser (such person hereafter referred to as an "MAI Appraiser "), such appraisal to be in form and substance acceptable to the Town, in its sole discretion. 4.4 The amount of debt of a CFD may not have any substantial direct or indirect negative impacts on the debt or financing capabilities of the Town, and the debt imposed on the CFD may not impose an unreasonably high financial burden on future CFD residents. 4.5 If general obligation bonds are to be issued by the CFD, those general obligation bonds will be secured by an unlimited ad valorem tax on all taxable property located within the CFD. Prior to the issuance of general obligation bonds by the CFD, the applicant shall describe in the project feasibility report, in addition to the statutory requirements, the following information: a. The current direct and overlapping tax and assessment burden on the taxable property that is proposed to be taxed and the full cash value and assessed valuation of the taxable property as shown on the most recent assessment roll. b. The amount and timing of CFD general obligation bonds to be issued. C. The expected market absorption of development within the CFD. 8 d. The effect of the CFD bond issuance on CFD property tax rates, calculated over the entire period of time that the proposed General Obligation Bonds are estimated to be outstanding or based on the phasing of the project to be financed, as applicable. e. The CFD Board may attempt to limit the total tax rates of the CFD. If the pre- established debt service tax rate is not sufficient to pay the entire debt service in respect of outstanding General Obligation Bonds when due, the Applicant will be required to contribute an amount annually sufficient to pay the difference between the revenues produced by the pre - established tax rate and the actual CFD debt service coming due in that fiscal year. Security for the Applicant's payment of this contribution may be in the form of a cash contribution, standby contribution agreement or other form of security approved by the CFD Board in its sole discretion. The security provided shall be bankruptcy -proof and shall be submitted to the CFD Board prior to issuance of the first General Obligation Bonds for the CFD, including a cash flow schedule illustrating the security amount and the time period required to cover any such shortfall. The security shall remain in full force and effect until such time as the CFD Board, exercising its sole discretion, determines the assessed value of real property in the CFD is sufficient to generate ad valorem taxes at the pre- established CFD tax rate sufficient to pay the actual CFD debt service. At that time, the CFD Board, exercising its sole discretion, will determine whether the Applicant's security will be released in whole or in part. f. Any economic advantage or the estimated savings, if any, to residents in the form of reduced purchase prices, enhanced public services and/amenities, additional community benefits, etc. that are projected to result from CFD financing. g. The marketing plan for the issuance of bonds shall be described. The plan should include a statement of whether the bonds will be publicly offered or privately placed. Publicly offered bonds must be rated in one of the four highest investment grade ratings from either Standard & Poor's Corporation, Moody's Investors Services, Inc., or other nationally recognized bond rating services. Pursuant to state statutes, the CFD will not issue non - investment grade bonds in a public offering. Privately placed bonds need not be rated. However, purchases of such general obligation bonds must be "qualified buyers" (similar to those acceptable pursuant to the Securities Exchange Commission) and must agree to hold the bonds for their own account and not to resell the bonds except to "qualified buyers" in a private placement. 4.6 Revenue bonds shall be payable from a specified revenue source. An Applicant for revenue bonds must describe in each project feasibility report, along with the statutory requirements, the following: a. The current direct and overlapping tax and assessment burdens on the taxable property within the CFD and the full cash value and assessed valuation of that taxable property as shown on the most recent assessment roll. 9 b. The revenue source from which bonds will be payable. The Town reserves the right to require the applicant to produce such independently prepared financial feasibility studies or reports as it deems necessary to confirm the amount and availability of revenues. C. The expected market absorption of development within the CFD. d. The amount and timing of CFD revenue bonds to be issued. e. The financial impact of the proposed issue(s) on prospective residents. f. Any plan for subsidizing revenues to meet obligations, including financial guarantees in a form acceptable to the Town in its sole discretion. g. Whether the bonds will be publicly offered or privately placed. Publicly offered revenue bonds must be rated in one of the four - highest investment grade ratings from either Standard & Poor's Corporation, Moody's Investors Service, Inc., or other nationally recognized bond rating services. Pursuant to state statutes, the CFD will not issue non - investment grade bonds in a public offering. Privately placed bonds need not be rated. However, purchasers of such revenue bonds must be "qualified buyers" (similar to those acceptable pursuant to the Securities Exchange Commission) and must agree to hold the bonds for their own account and not to resell the bonds except to "qualified buyers" in a private placement. 4.7 Assessment bonds shall be secured by first lien (subject only to the lien for general taxes and prior special assessments) on the property benefited. Applicants for assessment bonds should describe in each project feasibility report, the following: a. The current direct and overlapping tax and assessment burdens on real property to comprise the CFD and the full cash value and assessed valuation of that property as shown on the most recent assessment roll. b. The amount and timing of CFD assessment bonds to be issued. C. The expected market absorption of development within the CFD. d. The estimated assessment amount to be placed on prospective assessed parcels. e. Whether the assessments will be paid upon the sale of lots by the Applicant or will remain on the property after sale. f. Whether the assessment bonds will be publicly offered or privately placed. Publicly offered assessment bonds must be rated in one of the four highest investment grade ratings from either Standard and Poor's Corporation, Moody's Investors Service, Inc., or other nationally recognized bond rating services. Pursuant to state statutes, the 10 Cav CFD will not issue non - investment grade bonds in a public offering. In a public offering, an appraisal of the land to be encumbered, prepared by an MAI Appraiser and in form and substance acceptable to the CFD Board, in its sole and absolute discretion, shall indicate a minimum land value to debt ratio of 6 to 1 prior to the issuance of debt. Privately placed bonds need not be rated. However the purchasers of such assessment bonds must be "qualified buyers" (similar to those acceptable pursuant to the Securities Exchange Commission) and agree to hold the bonds for their own account and not to resell the bonds except to "qualified buyers" in a private placement. Further, in connection with the sale of unrated privately placed assessment bonds, the CFD Board must have received an appraisal of the land to be encumbered, prepared by an MAI Appraiser and in form and substance acceptable to the CFD Board, in its sole discretion, indicating a minimum land value to debt ratio of 4 to 1 as of a date prior to the issuance of debt. If a 4 to 1 ratio is not achieved, a scaling down of the proposed debt and phasing of the infrastructure is expected. 4.8 Notwithstanding the restrictions pertaining to public sales and private placements of the bonds set forth in this Article 4, the restrictions may be modified if other financing structures are presented which, in the sole discretion of the CFD Board, provide other means to address the CFD Board concerns. ARTICLE 5. Financing Considerations 5.1 The Applicant or developer /landowner shall provide at least $0.25 in infrastructure or community improvements for each $1.00 of debt to be issued by a CFD to finance public infrastructure purposes. If agreed to by the CFD Board, in its sole and absolute discretion, prior infrastructure and community improvements constructed or acquired by the Applicant or the developer /landowner and benefiting the property within the CFD may be included in calculating the Applicant's or developer /landowner's compliance with this Section 5.1. As described in Article 2 above, the Applicant shall provide a detailed description of how the Applicant will provide the equity contribution of the proposed total costs of the project. This description shall include details of whether the developer is using cash and/or debt and the source of such equity contribution. 5.2 If allowed by law, all bond issues shall include a reasonable debt service reserve fund or acceptable debt service surety in an amount acceptable to the CFD Board. The Town Council and/or CFD Board shall have the right to require the Applicant to fund a reserve account in such amounts as determined by the Town or CFD Board to ensure payment. The Town or CFD Board will determine whether the reserve shall be funded through bond proceeds, project revenues or directly by the Applicant. 5.3 Unless otherwise agreed, it is expected that general obligation bond authorization for a CFD shall expire no later than 15 years from the date of voter authorization. Ciw,� 5.4 The Applicant or developer /landowner (or such other third party acceptable to the Town and the CFD) for any CFD bonds, shall indemnify the Town and the CFD and their agents, officers, and employees and shall hold the Town and the CFD and their agents, officers and employees harmless for, from and against any and all liabilities, claims, costs and expenses, including attorneys' fees, incurred in any challenge or proceeding to the formation, operation, administration of the CFD, the offer and sale of CFD bonds, the levying by the CFD of any tax, assessment or charge and the operation and maintenance of public infrastructure financed or owned by the CFD. In addition, if such insurance is not otherwise available from another source, the Applicant shall be responsible for the cost of a Director's and Officers (D &O) insurance policy to cover all actions and activities taken by the CFD Board and officers of the CFD relating to the CFD formation, financing, administrative actions of other related activities. The Applicant shall be responsible for depositing the amount of any deductible in escrow with the CFD or for providing a plan for providing for such deductible. The amount of the D &O coverage will be determined by the CFD at the time of formation. 5.5 Unless otherwise provided to the Town pursuant to other requirements, prior to CFD financing and acquisition by the CFD or Town, the CFD or Town will require an independent environmental report or assessment of any real property which will be dedicated to or otherwise owned, leased or operated by the Town or the CFD and a proposed form or indemnity agreement with respect to all environmental law liability. 9196.0011CFD Policy.vldoc 3- 28 -03 -1 12