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2008 Financing plans for Metro Dist DraftStan Bernstein and Associates, Inc. Financial Planners and Consultants For Local Governments, Municipal Bond Underwriters, and Real Estate Developers 8400 East Prentice Ave., Penthouse Greenwood Village, Colorado 80111 Telephone: 303-409-7611; Fax: 303-409-7612; Email: stanplan@earthlink.net May 9, 2008 Board of Directors Base Village Metropolitan Districts No 1 and No. 2 Andy Kane, Rob Schutlz, D.A. Davidson Bill Ankele, Esq., Victor Munteanu, Esq., Jennifer Gruber, Esq., White, Bear, Ankele Others RE: FINANCING PLANS FOR BASE VILLAGE METROPOLITAN DISTRICTS NO. I AND NO.2 - DRAFT 39 Enclosed are draft financing plans for Base Village Metropolitan District No. 2 (Financing District #2) and Base Village Metropolitan District No. 1 (Service District #1). Financing District #2 is assumed to include all of the residential product (603 living units) and 40,622 square feet of Skier/Community Service space, and be subject to an assumed mill levy of 43.5 (5.0 for operations and 38.5 for debt service). Service District #1 is assumed to include 71,468 square feet of Retail and Food and Beverage space and 47,814 square feet of Community Facility space, and be subject to an assumed mill levy of 5.0 (5.0 for operations and zero for debt service). Property tax revenues generated from the debt service mill levy of Financing District #2 could initially enable the Developer to fund approximately $40.73 million of public infrastructure costs (comprised of $26.64 million of Service District related infrastructure costs (as presented on the following page); and an additional $14.09 million of GID related infrastructure costs through the issuance of approximately $47.75 million of tax-exempt bonds, comprised of (i) $15.0 million of general obligation variable rate bonds (the "Series 2008A Bonds") issued by the Financing District on June 26, 2008, and (ii) $32.75 million of subordinate general obligation enhanced variable rate bonds (the "Series 2008B Bonds") also issued by the Financing District on June 26, 2008 (which include approximately 17 months capitalized interest and related fees for the Series 2008A Bonds and approximately 29 months capitalized interest and related fees for the Series 2008B Bonds). It is important to understand that the combined infrastructure costs related to the Metropolitan District and General Improvement District total $40,731,538, as presented on page 2, and are expected to be funded from the combined net proceeds of both Series 2008A and B Bond Issues. May 9, 2008 Page ii It appears that Financing District #2 could issue an additional $4.5 - 6.0 million of non- rated bonds on December 1, 2014 which could reimburse the Developer for additional infrastructure costs not funded from the Series 2008A & B Bonds. Draft 39 assumes 6 mills (increasing to a maximum of 10 mills by 2029) will be needed to be transferred to the General Improvement District. It is possible that all 10 mills will not be required to be transferred to the General Improvement District which would enable the Financing District #3 to issue additional Bonds Capital Improvements Funded From both series of Series 2008A and B Bonds allocated as follows — based upon expected ownership of such assets: A. Service District: Skier Bridges - Funnel Skier Bridges — Wood Road Skier Bridges — Under BV Main St. Trails and Sidewalks Storm Drainage Aqua Center Cabriolet Landing Site Transit Center Conference Ctr. Day Skier Parking Capitalized Legal, Admin. Totals Less: Developer Funded Total Funded from Bonds B. General Improvement District: Snowmelt for LCW/Wood Road LCW/Wood Road Improvements TOSV Snowmelt of LCW Round -A -Bout and Wood Rd Bridge Ladder Fire Truck 3% Developer Fee All Projects Totals Less: Developer Funded Total Funded From Bonds $ 1,750,157 1,845,416 3,047,077 907,781 2,284,978 4.500,000 82,686 4,909,975 3,573,566 16,804,176 1,250,000 $40,955,812 $13,235,847 $27,719,965 $ 5,212,759 2,329,782 2,174,342 3,380,381 886,423 1,648,185 $15,631,872 $ 2,620,299 $13,011,573 Total Bonds Service District & GID$40,731,538 2008 2008 2008 2008 2008-9 2010-11 2008 2008-9 2008-9 2008-9 2008 2008 2008-11 May 9, 2008 Page iii The Financing Plan assumes that the Financing District's #2 Series 2008B subordinate General Obligation Bonds in the amount of $32,750,000 (with assumed average interest rate of 3.00% through June 1, 2011 and 6.00% thereafter) will be structured (according to D.A Davidson) so that any credit facility related thereto would be eliminated by June 1, 2011 (Andy Kane, of D.A. Davidson, wants everyone to understand that there are letter of credit "burn off' provisions associated with increases in assessed valuation, so that it may not be necessary to refund the Series 2008A and B Bonds). The interest payments and related fees (LOC, remarketing, and paying agent fees) on the Series 2008B subordinate General Obligation Bonds through December 1, 2010 are assumed to be funded from capitalized interest assuming an average interest rate of 6.00%, and annual LOC fees of 40 basis points for UBS and 2.25% for HYPO plus annual fees and remarketing fees — the Financing Plan, based on direction from D.A. Davidson, assumes that average interest rates will be 3.00%, rather than the assumed 5.50% rate which the 29 months capitalized interest has been sized upon; consequently it is assumed that as of December 1, 2010 excess capitalized interest in the amount of approximately $1,990,569 will be available to fund capital projects or reimburse the Developer for infrastructure costs. The Financing Plan assumes that the Financing District's Series 2008A General Obligation Bonds in the amount of $15,000,000 (with assumed average interest rate of 2.50% through June 1 , 2011 and 6.00% thereafter). The interest payments and related fees on the Series 2008A General Obligation Bonds through December 1, 2009 are assumed to be funded from capitalized interest assuming an average interest rate of 2.50%., and annual LOC fees of 120 basis points for UBS plus annual fees and remarketing fees (per D.A. Davidson). Interest on the Series 2008A and B General Obligation Bonds after the capitalized interest is expended is assumed to be funded from a Capital Facility Fee in the amount of $5,150 (increased approximately 7% annually) collected at the time of the closing of each residential living unit, and from property tax revenues. The Financing Plan presents, to the best knowledge and belief of the Developer and the Districts (based upon assumptions provided by the Developer), the Districts' expected cash position and results of cash receipts and disbursements for the forecast period. Accordingly, the Financing Plan reflects the Developer's and the Districts' judgment, as of the date of this report, of the expected conditions within the Districts' boundaries and the Districts' expected course of action., The assumptions disclosed in the Financing Plan are those of the Districts and Developer and have not been independently reviewed by Stan Bernstein and Associates, Inc. May 9, 2008 Page iv The Financing Plan assumes a maximum Financing District #2 mill levy of 43.5 mills. and a Service District mill levy of 17.5 for certain commercial properties For Draft 38 a Financing District #2 mill levy of 29.5 is assumed for years 2007 through 2009; 43.5 mills from 2010 through 2015; 42.5 mills from 2016 through 2022; 41.5 mills from 2023 through 2025; 41.0 mills in 2026; 40.5 mills in 2027 and 2028; and 39.5 mills for years thereafter. Exhibit II (Service District), page 5 is based upon the following key assumptions: • Aqua Center net operating expenditures (i.e., all operating costs less all operating revenues) are expected to be approximately $80,000 beginning in 2011 (increasing 3% annually beginning in 2012) according to officials of Intrawest. • Net Conference Center operating deficits in years 2008 through 2010 are expected to total approximately $400,000 based upon revenue and cost estimates developed by representatives of Westpac/Related, Beyond 2010 $75,000 annual operating subsidies are assumed with 3% increases beginning in 2012 (although Westpack/Related has developed operating revenue and cost estimates indicating that annual surpluses could be generated by the Conference Center, but for financial planning purposes $75,000 annual deficits are assumed beginning in 2010). • The Service District is assumed to generate approximately $480,000 annually from parking garage fees (i.e., 200 spaces @ $20 x 100 days + 40 days @ $20 x 100 spaces) according to officials of Westpac/Related, The Service District is expected to expend approximately $280,000 annually (increasing 3% annually beginning in 2012) for operations and administrative parking garage related costs according to officials of Westpac/Related. Net parking garage revenues of approximately $200,000 annually beginning in 2009 will be used to fund Service District's operating costs and minimize the amount of property tax transfers from Financing District #2. • A Capital Facility Fee in the approximate amount of $5,150 (assumed to increase approximately 7% annually) will be collected upon the sale of each residential living unit and used to pay interest on the Series 2008A & B General Obligation Bonds. May 6, 2008 Page v • A portion of the Financing District's #2 assumed maximum 43.5 mill levy will be transferred annually to the Service District. During 2007 and 2008, approximately 29.50 mills are assumed to be transferred; during 2009 14.75 mills are assumed to be transferred; and for 2010 and years thereafter approximately 5.00 mills are assumed to be transferred. A 5.0 mill Service District's mill levy is also assumed to be used for operations. • Service District Administrative expenditure allowances are presented on Exhibit II and are assumed to increase 3% annually beginning in 2009. • We have allowed large administrative/operating contingency allowances increasing from $112,000 during 2008 increasing to $375,000 during 2015. These contingency allowances could be used to fund additional operating costs relating to the Aqua Center, the Conference Center, and the Parking Facility. They could also be used to fund additional administrative related costs. If these contingency allowances are not needed, they could be used by the Financing District to service debt service on additional general obligation bond issues. For example $375,000 could support an additional $5.0 million of non -rated general obligation bonds issued in 2014 with net proceeds being used to reimburse the Developer for infrastructure costs previously incurred. The land use and buildout estimates are presented on Schedule 2, page 3, and on Schedule 4, page 6. Assessed valuation estimates, which are based upon land use and buildout estimates, are presented on Schedule 3, page 4 and assume 2% biennial increases beginning for tax collection year 2012. It is assumed that the Districts' mill levies will be adjusted for any decreases in assessed valuation caused by the Gallagher Amendment. May 9, 2008 Page vi DISCLAIMER AND LIMITATIONS The assumptions disclosed in the Financial Plan are those of the Developer and the Districts, and have not been independently reviewed by Stan Bernstein and Associates, Inc. Those assumptions identified are believed to be the significant factors in determining financial feasibility; however, they are likely not to be all-inclusive. There will usually be differences between forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. Key assumptions — like those relating to market values of real property improvements and the buildout schedule of such property — are particularly sensitive in terms of the timing necessary to create the tax base for the Financing District. A small variation in these variables, and to their timing, can have a large effect on the forecasted results. There is a high probability that the forecasted results will differ from realized future tax base factors. Additionally, other key assumptions relating to inflation, assessment ratios, interest rates, debt service coverage requirements, and infrastructure, administrative and operating costs may, and likely will, vary from those assumed. Because Stan Bernstein and Associates, Inc. has not independently evaluated or reviewed the assumptions that the Financial Plan is based upon, we do not vouch for the achievability of the information presented on Exhibits I - II and on Schedules 1 - 6. Furthermore, because of the inherent nature of future events, which are subject to change and variation as events and circumstances change, the actual results may vary materially from the results presented on Exhibits I - II and on Schedules 1 - 6. Stan Bernstein and Associates, Inc. has no responsibility or obligation to update this information or the Financial Plan for events occurring after the date of this report. The actual amount of General Obligation Bonds that could be supported by the Districts will depend on the rate of buildout and the related increases in assessed valuation, interest rates and debt service coverage requirements, and the actual amounts needed to pay for the Districts' and the GID's administrative and operating costs. In the event that the Districts' actual operating and administrative expenses are more than anticipated on Exhibit II, the amount of General Obligation Bonds that could actually be supported by the Districts could be less than shown, and if assessed valuation levels are more than anticipated it could be possible for the Districts to issue additional General Obligation Bonds than shown. Very truly yours, Starz Bernstein, President (for the firm) Stan Bernstein and Associates, Inc.