Good evening, members of the Indio City Council.

I am Gracie Nilson, a local real estate broker and one of the few original homeowners left in Terra Lago. My home has been burdened by the excessive costs of the 2004-3 $26.3 million Mello Roos Tax. I pay $360.00 per month for this tax. A grand total of $28,800 thus far. This 30 year bond, frankly benefits all the others in the 2004-3 District, including the City. excessive and continues to affect the sales price of our homes. The CFD 2004-3 Mello Roos Tax District was formed in 2005 by a vote of the landowners to issue bonds to pay to develop the Terra Lago District. The CDF 2004-3 tax district includes 1) Terra Lago (Area 1) with 635 homes; The Wyndham Time Shares; 3) The Terra Lago Golf Course; and 4) The Rabobank development with its 831 homes [Area 2]. The CFD 2004-3 tax was approved for bond offerings of $30 million for each Area 1 and Area 2. Such a lien was recorded as Riverside Doc No. 2005-0603064. Its just not right. To allow the Timeshare, Golf Course and Area 2 to benefit from the taxes paid by Area 1 residents. Ms. Mayor I respectfully request the city perform its fiduciary duty and hire an outside unbiased firm for an independent accounting of these matters. I am upset at the thought that the Hovnanian Project, would not fund their own infrastructure development. We paid this development by our Area 1 Bond. Now it appears that Hovnanian is attempting to bypass paying anything. It appears that over $7 million were used for other areas of this special tax district. My bond offering was for $26.3 million. The initial steps to determine the size of a Mello Roos Bond Offering is the appraised values of the unfinished land. The typical bond must have collateral to ensure the bond investors can get their money back if the development fails. In other words the foreclosed land value must be at least 300% higher that the bond offering. That equates to a 3:1 land value to offering ratio. Most investors want 500% or 5:1, since the land may not be worth much. Typically a Mello Roos offering ratio is important because the appraised value is divided by the ratio number to get the size of the offering. Once the offering amount is It is

determined then a financial consultant, in this case Willdan Financial, determines the amount each home would be responsible for over a 30 year offering. Here the 2005 formation appraised values were $137,000 per undeveloped lot. A total value of $81 million. Today, Willdan Financial states the finished lot values are $42,000. The undeveloped property lot values are $31,000. Todays numbers indicate a total land value of $19 million and an offering of $6 Million. That is $20 million less done in 2005. The lowest debt to value ratio of 3 was used to figure out the total allowed tax of $26.3 million for the 635 homes. In other words the formation of the Mello Roos tax for Area 1 used appraised values of 400% higher than todays finished lot values. Indios public records, including the Indio Water District Notes have been reviewed. The councils own Indio Water Authority or Water notes on April 28, 2005 demonstrates that $8.1 million in water projects needed to be completed by spring 2006 and that no money was available. The September 19, 2005 Water notes states that there were water restrictions placed on the city. The Timeshare has difficulties with water pressures. In fact as the City knows there was far more than water problems. There were law suits from the delay of construction due to these promised water pressures. The CFD 2004-3 funded in September 12, 2005. The CFD 2004-3 District construction fund received $19.4 million. Ironically the water rates increased in July 2005 to include the new construction impact fees to be paid per house. The total was $3,025.00 per new house construction. The increase was figured into the amount the City received from water impact fees. In fact the City received an additional $2.6 million for the 831 impact fees for Area 2. I ask why the Wyndham Time Share would not pay the CFD 2004-3 tax. They benefitted from the many millions in Mello Roos water money. This council may recall while

building the Timeshare the City could not supply enough water and was required to get a large bladder costing over $1mm to supply enough money so that the construction

would be completed. Remember the lawsuits that were settled? See Agenda Package Indio Water February 2005 page 4 of 23. When the CFD 2004-3 funding occurred $19,497,174.37 went to the Acquisition and Construction Fund. The funding, construction, and acquisition agreement further set Strict

the formal requirements for funding, coverage, and allowed construction. compliance is necessary. It appears that such compliance was not followed.

In summary I feel that the CFD 2004-3 tax on Area 1 is burdensome, excessive, based on a faulty appraised value, and used too high of a land to value ratio. My total tax is over 3%. I believe that Area 2 and the Time Share who received the benefits from the Area 1 tax money should alleviate such burden by paying their fair share. Further Area 2 is encumbered by the 2004-3 Mello Roos Tax by a vote of the original land owners. It is unclear how they may walk from such vote, receive the benefits from the CFD 2004-3 tax, and build properties that would compete with the 100 unfinished lots in Area 1. Not to mention the devaluation of properties associated with the Area Mello Roos Tax. I reviewed the results of the 2011-2012 Financial Report on CFD 2004-3. The

undeveloped lots owned by the Rabobank entity paid no tax. Why would they want to build Mello Roos homes when there is no incentives? I ask the City to work with the registered voters in Area 1 to reapportion the way the Mello Roos Tax is paid for Area 1 undeveloped properties. These properties have no incentives to build. They should at least pay the full tax. This alone, would lower our tax by approximately 25% per home. Other like the Timeshare should be responsible to pay their fair share. Thank you for your time and consideration. Respectfully, Gracie Nilson