"expirience it All"*

There is a lack of transparency to homeowners relative to how CFD funds are being used. CITY CLERK MITZI ORTIZ, MMC This finding is not applicable to the City of Aliso Viejo. The City provides annual reporting to Council in compliance with Government Code Sections: 50075.3 (General – Voter-Approved Special Taxes) 0 53411 (Bonds – Bond Accountability) 0 Government Code sections 50075.3 and 53411 require the chief CITY OF ALISO VIEJO financial officer of the levying and issuing local agency to file annual INCORPORATED JULY 1, 2001 reports on all voter-approved special taxes and bonded indebtedness 12 JOURNEY . SUITE 100 with its governing body: ALISO VIEJO CALIFORNIA 92656-5335 The amount of funds collected and expended WWW.CITYOFALISOVIEJO.COM The status of any project required or authorized to be funded as . PHONE 949.425.2500 approved by voters FAX 949.425.3899 OC Grand Jury CFD 2005-01 The provided the City's website annual reports on are at http://www.cityofalisoviejo.com/city-hall/departments/financial-services/mello- roos/. In addition, sellers of property within the CFD are required to comply with Government Code Section 53340.2 by providing a Notice of Special Tax (attached) to prospective buyers. The City and/or Koppel & Gruber Public Finance ("KGPF"), the City's CFD administrator, provides prospective homebuyers information regarding their tax obligations upon request. Furthermore, the City annually submits Yearly Fiscal Status reports to the California Debt and Investment Advisory Commission ("CDIAC"). All such reports are available as public records from the City of CDIAC.

There does not seem to be appropriate oversight and auditing of CFDs and special tax expenditures within the County of Orange. The City of Aliso Viejo provides information on CFD 2005-01 within its audited annual financial statement and submits it to Council annually. The annual financial statements are also available on the City's website. The only expenditures of this district are for debt service (principal and interest) and administrative costs. As stated above, the City annually submits reports to Council in compliance with Government Code Sections 50075.3 and 53411.

While the assumption is that the CFD debt would be repaid in a finite period of time, there is a mechanism available to controlling entities to extend debt obligations and thereby extend the CFD special tax in perpetuity. The City of Aliso Viejo believes that flexibility within the constraints of the Modified Rate and Method of Apportionment is appropriate. This flexibility allows the taxpayers of the CFD to benefit from interest rate changes or development changes that could affect the financial aspect of the financing. For example, the City was able to refinance the original CFD 2005-01 debt in February 2014 to provide savings to its residents without extending past the life of the original issuance. Additionally, the Modified Rate and Method of Apportionment limits the ability of the CFD to levy taxes for a term to exceed 40 years commencing with fiscal year 2006/2007. OC Grand Jury .5 CFD 2005-01 Recommendations