NEW ISSUE - BOOK-ENTRY ONLY RATING Series 2012A-1 Bonds: S&P: "A-"Series 2012A-2 Bonds: NR

(See "Rating" herein)

In the opinion of Greenberg Traurig, P.A., Bond Counsel, under existing statutes, regulations, rulings and court decisions and assuming continuing compliance with certain covenants and the accuracy of certain representations, (a) interest on the Series 2012 Bonds will be excludable from gross income for federal income tax purposes, (b) interest on the Series 2012 Bonds will not be an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, (c) interest on the Series 2012 Bonds will be taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations, and (d) the Series 2012 Bonds and the income thereon will not be subject to taxation under the laws of the State of Florida, except estate taxes and taxes under Chapter 220, Florida Statutes, as amended, on interest, income or profits on debt obligations owned by corporations as defined therein. For a more complete discussion of the tax aspects, see "TAX MATTERS."

POINCIANA COMMUNITY DEVELOPMENT DISTRICT (Polk County, Florida)

$13,285,000Senior Special Assessment Refunding Bonds,

Series 2012A-1And

$8,000,000Subordinate Special Assessment Refunding Bonds,

Series 2012A-2Dated: Date of original issuance Due: May 1, as shown on the inside cover

The Poinciana Community Development District Senior Special Assessment Refunding Bonds, Series 2012A-1 (the "Series 2012 Senior Bonds") and the Poinciana Community Development District Subordinate Special Assessment Refunding Bonds, Series 2012A-2 (the "Series 2012 Subordinate Bonds" and collectively with the Series 2012 Senior Bonds, the "Series 2012 Bonds"), are being issued by the Poinciana Community Development District (the "District") pursuant to a Master Trust Indenture dated as of April 1, 2000 from the District to U. S. Bank National Association (as successor in trust to First Union, National Bank), as Trustee (the "Trustee") (the "Master Trust Indenture"), as supplemented by a Second Supplemental Trust Indenture dated as of April 1, 2012, from the District to the Trustee (the "Supplemental Indenture" and together with the Master Trust Indenture, the "Indenture"). The Series 2012 Bonds are being issued only in fully registered form, in denominations of $5,000 and integral multiples thereof. The District was created pursuant to the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended, any successor statute thereto, the Florida Constitution, and other applicable provisions of law (collectively, the "Act") and Chapter 42AA-1, Florida Administrative Code, adopted by the Florida Land & Water Adjudicatory Commission on November 1, 1999. The Series 2012 Bonds are payable from and secured by the Series 2012 Trust Estate, which includes the Series 2012 Pledged Revenues; provided, however, that, prior to Accession (as hereinafter defined), the lien and pledge of the Series 2012 Trust Estate to the Series 2012 Subordinate Bonds shall, as provided in the Supplemental Indenture, be subordinate and inferior to the lien and pledge thereof to the Series 2012 Senior Bonds, including, but not limited to, the rights to pay and enforcement of rights and remedies under the Supplemental Indenture and under the Master Indenture. The Series 2012 Pledged Revenues consist primarily of the revenues derived by the District from non ad valorem special assessments levied against certain lands within Solivita® (the "Development"). See "SECURITY FOR AND SOURCE OF PAYMENT OF BONDS".

The Series 2012 Bonds, when issued, will be registered in the name of Cede & Co., as the owner and nominee for The Depository Trust Company ("DTC"), New York, New York. Purchase of beneficial interests in the Series 2012 Bonds will be made in book-entry only form. Accordingly, principal of and interest on the Series 2012 Bonds will be paid from the sources provided below by the Trustee directly to Cede & Co. as the nominee of DTC and the registered owner thereof. Disbursements of such payments to the DTC Participants is the responsibility of DTC and disbursements of such payments to the beneficial owners is the responsibility of DTC Participants and the Indirect Participants, as more fully described herein. Any purchaser as a beneficial owner of a Series 2012 Bond must maintain an account with a broker or dealer who is, or acts through, a DTC Participant to receive payment of the principal of and interest on such Series 2012 Bond. See "DESCRIPTION OF THE SERIES 2012 BONDS - Book-Entry Only System" herein. The Series 2012 Bonds will bear interest at the fixed rates set forth herein, calculated on the basis of a 360-day year comprised of twelve thirty-day months. Interest on the Series 2012 Bonds is payable semi-annually on each May 1 and November 1, commencing November 1, 2012.

The Series 2012 Bonds are subject to optional, mandatory and extraordinary mandatory redemption at the times, in the amounts and at the redemption prices as more fully described herein.

The Series 2012 Bonds are being issued to: (i) together with other legally available funds, to currently refund and redeem the District's Outstanding Special Assessment Bonds, Series 2000A on May 1, 2012 (the "Refunded Bonds"), (ii) fund the Debt Service Reserve Requirement (as defined in the Indenture), (iii) pay certain costs associated with the issuance of the Series 2012 Bonds.

THE SERIES 2012 BONDS ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY OUT OF THE SERIES 2012 TRUST ESTATE (AS DESCRIBED BELOW) PLEDGED THEREFOR UNDER THE INDENTURE AND NEITHER THE PROPERTY, THE FULL FAITH AND CREDIT, NOR THE TAXING POWER OF THE DISTRICT, POLK COUNTY, FLORIDA, THE STATE OF FLORIDA, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED AS SECURITY FOR THE PAYMENT OF THE SERIES 2012 BONDS, EXCEPT THAT THE DISTRICT IS OBLIGATED UNDER THE INDENTURE TO LEVY AND TO EVIDENCE AND CERTIFY, OR CAUSE TO BE CERTIFIED, FOR COLLECTION, ASSESSMENTS (AS DEFINED HEREIN) TO SECURE AND PAY THE SERIES 2012 BONDS. THE SERIES 2012 BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OF THE DISTRICT, POLK COUNTY, FLORIDA, THE STATE OF FLORIDA, OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION OR LIMITATION.

THE SERIES 2012 BONDS INVOLVE A DEGREE OF RISK (SEE "BONDOWNERS' RISKS" HEREIN) AND ARE NOT SUITABLE FOR ALL INVESTORS (SEE "SUITABILITY FOR INVESTMENT" HEREIN). THE UNDERWRITER IS LIMITING THIS OFFERING OF SERIES 2012A-2 BONDS TO ACCREDITED INVESTORS WITHIN THE MEANING OF THE RULES OF THE FLORIDA DEPARTMENT OF FINANCIAL SERVICES; THE LIMITATION OF THE INITIAL OFFERING OF SERIES 2012A-2 BONDS TO ACCREDITED INVESTORS DOES NOT DENOTE RESTRICTIONS OF TRANSFER IN ANY SECONDARY MARKET FOR THE SERIES 2012A-2 BONDS. THE SERIES 2012A-2 BONDS ARE NOT CREDIT ENHANCED OR RATED AND NO APPLICATION HAS BEEN MADE FOR A RATING WITH RESPECT TO THE SERIES 2012A-2 BONDS, NOR IS THERE ANY REASON TO BELIEVE THAT THE DISTRICT WOULD HAVE BEEN SUCCESSFUL IN OBTAINING A RATING FOR THE SERIES 2012A-2 BONDS HAD APPLICATION BEEN MADE.

This cover page contains information for quick reference only. It is not, and is not intended to be, a summary of the Series 2012 Bonds. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision.

SEE INSIDE COVER PAGE FOR A MATURITY SCHEDULE OF THE SERIES 2012 BONDS

The Series 2012 Bonds are offered for delivery when, as and if issued by the District and accepted by the Underwriter, subject to prior sale, withdrawal or modification of the offer without notice and the receipt of the opinion of Greenberg Traurig, P.A., Miami, Florida, Bond Counsel, as to the validity of the Series 2012 Bonds and the excludability of interest thereon from gross income for federal income tax purposes. Certain legal matters will be passed upon for the District by its counsel, Hopping Green & Sams, P.A., Tallahassee, Florida for the Trustee by its counsel, Holland & Knight, LLP, Miami, Florida and for the Underwriter by its counsel, Nabors, Giblin & Nickerson, P.A., Tampa, Florida. It is expected that the Series 2012 Bonds will be available for delivery through The Depository Trust Company in New York, New York on or about April 19, 2012.

MBS Capital Markets, LLCDated: April 12, 2012

MATURITY SCHEDULE

$7,980,000 Serial Series 2012A-1 Bonds

Due May 1,PrincipalAmount

InterestRate Price

CUSIP No.*

2013 $515,000 1.600% 99.918 730479AC62014 525,000 2.125 99.732 730479AD42015 535,000 2.250 99.505 730479AE22016 550,000 2.500 99.353 730479AF92017 565,000 2.750 99.487 730479AG72018 580,000 3.000 99.398 730479AH52019 600,000 3.250 99.253 730479AJ12020 620,000 3.500 99.237 730479AK82021 645,000 3.750 99.468 730479AL62022 670,000 3.875 98.811 730479AM42023 695,000 4.000 98.420 730479AN22024 725,000 4.250 99.439 730479AP72025 755,000 4.375 98.262 730479AQ5

$1,615,000 4.375% Term Series 2012A-1 Bonds Due May 1, 2027 Price 98.214 CUSIP No. 730479AU6*$3,690,000 4.500% Term Series 2012A-1 Bonds Due May 1, 2031 Price 98.614 CUSIP No. 730479AV4*

Term Series 2012A-2 Bonds

$2,710,000 5.75% Term Series 2012A-2 Bonds Due May 1, 2021 Price 98.273 CUSIP No. 730479AW2*$5,290,000 6.00% Term Series 2012A-2 Bonds Due May 1, 2031 Price 95.631 CUSIP No. 730479AX0*

* The District is not responsible for the use of CUSIP numbers, nor is any representation made as to their correctness. They are included solely for the convenience of the readers of this Official Statement.

POINCIANA COMMUNITY DEVELOPMENT DISTRICT

BOARD OF SUPERVISORS

Robert Zimbardi, Chairman David Lane, Vice Chairman

LeRue “Skip” Stellfox, Assistant Secretary Donald A. Wright, Assistant Secretary

Richard W. Kellogg, Assistant Secretary

DISTRICT MANAGER

Severn Trent Services, Inc. Tampa, Florida

ASSESSMENT CONSULTANT

Fishkind & Associates, Inc.

Orlando, Florida

DISTRICT COUNSEL

Hopping Green & Sams, P.A. Tallahassee, Florida

BOND COUNSEL

Greenberg Traurig, P.A. Miami, Florida

DISTRICT ENGINEER

Atkins North America Orlando, Florida

REGARDING USE OF THIS OFFICIAL STATEMENT

No dealer, broker, salesman or other person has been authorized by the District, the State of Florida or the Underwriter to give any information or to 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 any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2012 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the District, the District Engineer, the District Manager, the Insurer, the Developer, and other sources that are believed by the Underwriter to be reliable. 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 this transaction, but the Underwriter does not guaranty the accuracy or completeness of such information. The District, the Developer, the District Engineer and the Financial Consultant will all, at closing, deliver certificates certifying that certain of the information each supplied does not contain any untrue statement of a material fact or omit to state a material fact required to be stated herein or necessary to make the statements herein, in light of the circumstances under which they were made, not misleading. 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 with respect to the matters described herein since the date hereof.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2012 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE SERIES 2012 BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON CERTAIN EXEMPTIONS SET FORTH IN SUCH ACTS. THE REGISTRATION, QUALIFICATION OR EXEMPTION OF THE SERIES 2012 BONDS IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAW PROVISIONS OF ANY JURISDICTIONS WHEREIN THESE SECURITIES HAVE BEEN OR WILL BE REGISTERED, QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THE DISTRICT, POLK COUNTY, FLORIDA, THE STATE OF FLORIDA NOR ANY OF ITS SUBDIVISIONS OR AGENCIES HAVE GUARANTEED OR PASSED UPON THE MERITS OF THE SERIES 2012 BONDS, UPON THE PROBABILITY OF ANY EARNINGS THEREON OR UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT.

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TABLE OF CONTENTS Page

INTRODUCTION ........................................................................................................................................ 1 SUITABILITY FOR INVESTMENT .......................................................................................................... 4 REFUNDING PLAN ................................................................................................................................... 4 VERIFICATION .......................................................................................................................................... 5 THE DISTRICT ........................................................................................................................................... 5

General ................................................................................................................................................. 5 Legal Powers and Authority ............................................................................................................... 5 Board of Supervisors ............................................................................................................................ 6 District Manager and Other Consultants .......................................................................................... 7

DESCRIPTION OF THE SERIES 2012 BONDS ...................................................................................... 7 General Description ............................................................................................................................. 7 Redemption Provisions ........................................................................................................................ 8 Notice of Redemption ......................................................................................................................... 12 No Acceleration .................................................................................................................................. 13 Book-Entry Only System ................................................................................................................... 13

SECURITY FOR AND SOURCE OF PAYMENT OF BONDS ............................................................... 15 General ............................................................................................................................................... 15 No Parity Bonds ................................................................................................................................. 16 Funds and Accounts........................................................................................................................... 17 Reserve Account Requirements; Series 2012A-1 Reserve Account and Series 2012A-2

Reserve Account .................................................................................................................... 17 Flow of Funds ..................................................................................................................................... 19 Accession of Series 2012 Subordinate Bonds ................................................................................... 21 Limitations on Rights and Remedies of Owners of Series 2012 Subordinate Bonds .................... 21 Enforcement and Collection of Series 2012 Assessments ............................................................... 22 Prepayment ........................................................................................................................................ 23 Re-Assessment ................................................................................................................................... 24 Structure of Series 2012 Assessments.............................................................................................. 24 Additional Covenant of the District Regarding Special Assessments ............................................ 24 Additional Events of Default and Remedies With Respect to Series 2012 Bonds ......................... 24 Provision of Supplemental Indenture Relating to Bankruptcy or Insolvency of Landowner ....... 25 Critical Personnel .............................................................................................................................. 26

ENFORCEMENT OF ASSESSMENT COLLECTIONS ......................................................................... 27 General ............................................................................................................................................... 27 Alternative Uniform Tax Collection Procedure for Series 2012 Assessments ............................... 27 Foreclosure ......................................................................................................................................... 30 Provision of Supplemental Indenture Regarding Foreclosing of Special Assessment Lien ......... 30 Projected Assessment Levels and Value to Lien Ratios upon Issuance of Series 2012 Bonds ..... 30 Tax Levies and Collections ................................................................................................................ 32

BONDOWNERS' RISKS ........................................................................................................................... 34 ESTIMATED SOURCES AND USES OF BOND PROCEEDS .............................................................. 38 DEBT SERVICE REQUIREMENTS ........................................................................................................ 39 THE DEVELOPMENT .............................................................................................................................. 40

General ............................................................................................................................................... 40 Sales/Marketing ................................................................................................................................. 41 Utilities ............................................................................................................................................... 41 Property Taxes, Other Assessments and Homeowner's Association Fees ..................................... 41

THE DEVELOPER .................................................................................................................................... 42 SPECIAL ASSESSMENT METHODOLOGY .......................................................................................... 42 TAX MATTERS ......................................................................................................................................... 43 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS ............................................ 45

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VALIDATION ............................................................................................................................................ 45 LITIGATION .............................................................................................................................................. 45 CONTINUING DISCLOSURE ................................................................................................................. 45 UNDERWRITING ..................................................................................................................................... 46 LEGAL MATTERS .................................................................................................................................... 46 AGREEMENT BY THE STATE ............................................................................................................... 47 FINANCIAL STATEMENTS .................................................................................................................... 47 EXPERTS AND CONSULTANTS ............................................................................................................ 47 CONTINGENT AND OTHER FEES ........................................................................................................ 47 RATINGS ................................................................................................................................................... 47 MISCELLANEOUS ................................................................................................................................... 48 APPENDICES: Appendix A Special Assessment Supplement for the Series 2012 Bonds Appendix B Forms of Master Trust Indenture and Supplemental Trust

Indenture Appendix C Form of Opinion of Bond Counsel Appendix D Form of Continuing Disclosure Agreement Appendix E Audited General Purpose Financial Statements of the District for

Fiscal Year Ended September 30, 2010 Appendix F Consulting Engineer’s Report

OFFICIAL STATEMENT

relating to

POINCIANA COMMUNITY DEVELOPMENT DISTRICT (Polk County, Florida)

$13,285,000 Senior Special Assessment Refunding Bonds,

Series 2012A-1 And

$8,000,000 Subordinate Special Assessment Refunding Bonds,

Series 2012A-2

INTRODUCTION

The purpose of this Official Statement, including the cover page and appendices hereto, is to set forth certain information concerning the Poinciana Community Development District (the "District") in connection with the offering and issuance by the District of its Senior Special Assessment Refunding Bonds, Series 2012A-1 (the "Series 2012 Senior Bonds" or the “Series 2012A-1 Bonds”) and the Poinciana Community Development District Subordinate Special Assessment Refunding Bonds, Series 2012A-2 (the “Series 2012 Subordinate Bonds” or the “Series 2012A-2 Bonds,” and collectively with the Series 2012 Senior Bonds, the “Series 2012 Bonds”). The District was created pursuant to the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended, any successor or statute thereto, the Florida Constitution, and other applicable provisions of law (collectively, the "Act") and Chapter 42AA-1, Florida Administrative Code, adopted by the Florida Land & Water Adjudicatory Commission (the "Commission") on November 1, 1999, as amended effective June 18, 2008 (as amended, the "Rule"). The District was established for the purpose, among other things of delivering certain community development services and facilities as authorized by the Act, including planning, financing, constructing, acquiring, owning, operating and maintaining the infrastructure and facilities benefiting District lands, including roadways, stormwater management facilities and earthwork, drainage structures, mitigation creation, mitigation area and stormwater area acquisition, utility mains, utility plant improvements and wastewater, potable water system and reuse facilities. The Series 2012 Bonds are being issued pursuant to the Act and a Master Trust Indenture, dated as of April 1, 2000 (the "Master Indenture"), from the District to U.S. Bank, National Association (successor in trust to First Union National Bank), as Trustee (the "Trustee") as supplemented by a Second Supplemental Trust Indenture, dated as of April 1, 2012 (the "Supplemental Indenture" and together with the Master Indenture, the "Indenture") and resolutions adopted by the Board of Supervisors of the District on November 18, 1999 and March 21, 2012, authorizing the issuance of the Series 2012 Bonds. All capitalized terms used in this Official Statement that are defined in the Indenture and not defined herein shall have the respective meanings set forth in the Master Indenture which appears in Appendix B attached hereto.

The District was established for the purpose of delivering specialized services and facilities described in the Act, including drainage, roads, recreational facilities and landscape improvements. The Act authorizes the District to issue bonds for the purpose, among others, of financing, funding, planning, establishing, acquiring, constructing or reconstructing, enlarging or extending, equipping, operating and maintaining facilities relating to such services, and other basic infrastructure projects within the boundaries of the District, all as provided in the Act.

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Under the Constitution and laws of the State of Florida, including the Act, the District has the power and authority to levy non-ad valorem assessments upon District Lands and to issue the Series 2012 Bonds for the purposes of providing community development services and facilities, including those financed with the proceeds of the Refunded Bonds and a portion of the Series 2012 Bonds as described herein.

Consistent with the requirements of the Indenture and the Rule, the Series 2012 Bonds are being issued for the primary purpose of refunding the District's outstanding Special Assessment Bonds, Series 2000A (the "Refunded Bonds"), the proceeds of which were used to finance the acquisition and construction of certain infrastructure and facilities benefiting District Lands, including roadways, stormwater management facilities and earthwork, drainage structures, mitigation creation, mitigation area and stormwater area acquisition, utility mains, utility plant improvements and wastewater, potable water system and reuse facilities. "District Lands" means the premises governed by the District, consisting of approximately 3,028 acres of land together with approximately 212 acres which was annexed by amendment to the Rule effective June 18, 2008, which increased the area of the District to a total of 3239.728 acres (the "Annexed Land"). All of the District Lands are located entirely within Polk County, Florida, and are more fully described in the Engineer's Report attached hereto as Appendix F.

The District issued $27,315,000 of its Special Assessment Bonds, Series 2000A (the "Series 2000A Bonds" or the "Refunded Bonds") of which $22,540,000 will be outstanding on May 1, 2012. The proceeds of the Series 2000A Bonds were used to finance the acquisition and construction of the public infrastructure for the initial phases of Solivita® (the "Development"), which is an approximately 4,187 gross acre, master planned development located within Polk County, Florida, including roadways, stormwater management facilities and earthwork, drainage structures, mitigation creation, mitigation area and stormwater area acquisition, utility mains, utility plant improvements and wastewater, potable water system and reuse facilities (the "2000A Project") and were secured by assessments upon the District Lands (the "2000A Assessments"). The Development is comprised of two Community Development Districts which include the District and the Poinciana West Community Development District. The portions of the Development which are coterminous with the boundaries of the District include phases 1 through 6 of the Development which are being developed to ultimately include 3,545 single family residential units, 692 multifamily units and 128,000 square feet of commercial space.

The Series 2012 Bonds will be secured by Special Assessments levied upon 3,058 single family lots, 1,084 multi-family units and 72 non-residential assessable units. There currently remain a total of 89 platted single family lots with no vertical construction although the lot development has been completed and 1,397 unplatted, planned future lots to be developed. The vacant residential lots (89), the undeveloped residential property, and the non-residential property are owned by Avatar Properties, Inc., the Developer. The Special Assessment Methodology Supplement for the Series 2012 Bonds (the "Assessment Report") has been prepared by Fishkind & Associates, Inc. and describes the specific par debt assessment required by each development unit to amortize the Series 2012 Bonds. The specific per unit assessments are assigned when a development unit is platted. See the Special Assessment Methodology Supplement which is attached hereto as Exhibit A.

The Series 2012 Bonds are payable from and secured by the revenues derived by the District from the Series 2012 Assessments and the Funds and Accounts (except for the Series 2012 Rebate Account) established by the Second Supplemental Indenture; provided, however, that, prior to Accession, the lien and pledge of the Series 2012 Trust Estate to the Series 2012 Subordinate Bonds shall, as provided in the Supplemental Indenture, be subordinate and inferior to the lien and pledge thereof to the Series 2012 Senior Bonds, including, but not limited to, the rights to pay and enforcement of rights and remedies under the Supplemental Indenture and under the Master Indenture. See “Security and Source of Payment of Bonds -- Accession of Series 2012 Subordinate

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Bonds” herein. The Series 2012 Assessments are defined in the Supplemental Indenture as (a) the net proceeds derived from the levy and collection of "special assessments," as provided for in Sections 190.011(14) and 190.022 of the Act (except for any such special assessments levied and collected for maintenance purposes), against the lands located within the District that are subject to assessment as a result of the refinancing of the 2000A Project or any portion thereof, and (b) the net proceeds derived from the levy and collection of "benefit special assessments," as provided for in Section 190.021(2) of the Act, against the lands within the District that are subject to assessment as a result of the refinancing of the 2000A Project or any portion thereof, and "special assessments" and "benefit special assessments," including the interest and penalties on such assessments, pursuant to all applicable provisions of the Act and Chapter 170, Florida Statutes, and Chapter 197, Florida Statutes (and any successor statutes thereto), including, without limitation, any amount received from any foreclosure proceeding for the enforcement of collection of such assessments or from the issuance and sale of tax certificates with respect to such assessments, less (to the extent applicable) the fees and costs of collection thereof payable to the Tax Collector and less certain administrative costs payable to the Property Appraiser pursuant to the Property Appraiser and Tax Collector Agreement. However, "Special Assessments" does not include "maintenance special assessments" levied and collected by the District under Section 190.021(3) of the Act.

The Series 2012 Assessments represent an allocation of a portion of the costs of the 2000A Project, including bond financing costs, to the lands within the District benefiting from the 2000A Project in accordance with the Assessment Report. The Series 2000A Assessment Proceedings do not require any prepayment of the Series 2000A Assessments prior to the due date therefor. However, the Series 2000A Assessment Proceedings do permit the prepayment in full of the Series 2000A Assessments at any time without penalty.

Subsequent to the issuance of the Series 2012 Bonds, the District may cause one or more Series of Additional Bonds or Refunding Bonds (as defined in the Master Indenture) to be issued pursuant to the Indenture, subject to the terms and conditions thereof. Additional Bonds may be issued for the purpose of paying the Cost of any Additional Series Project or any portion thereof or paying the Cost of completing a Series Project. Refunding Bonds may be issued for the purpose of refunding (including advance refunding) all or part of the Bonds then Outstanding of any one or more Series or maturities within a Series. Each Series of Additional Bonds and Refunding Bonds shall be secured separately from each other Series of Outstanding Bonds, except as otherwise provided in the Supplemental Indenture authorizing a Series of Bonds. In the Supplemental Indenture authorizing the Series 2012 Bonds, the District covenants and agrees that, so long as there are any Series 2012 Bonds Outstanding, it shall not cause or permit to be caused any lien, charge or claim against the Series 2012 Trust Estate. Except as set forth in the next succeeding sentence, the District further covenants and agrees in the Supplemental Indenture that, so long as there are any Series 2012A-2 Bonds Outstanding and Accession shall not have occurred, it shall not incur additional indebtedness, whether in the form of bonds or otherwise, secured by assessments levied upon the same property that is subject to Special Assessments without the consent of the Holders of a majority in aggregate principal amount of the Series 2012A-2 Bonds at the time Outstanding. Notwithstanding the preceding sentence, the District: (i) may incur additional indebtedness on a parity basis with the Series 2012A-2 Bonds Outstanding for the purpose of effecting repairs to or replacements of property, facilities or equipment of the District; and (ii) may incur additional indebtedness on a basis subordinate to the Series 2012A-2 Bonds for any legal purpose. However, the District may issue a Series of Bonds that are payable from assessments (other than the Series 2012 Assessments) levied on the lands in the Development that benefit from the Series Project financed by such Series of Bonds. See "SECURITY FOR AND SOURCE OF PAYMENT OF BONDS," herein.

There follows in this Official Statement a brief description of the District, together with summaries of the terms of the Series 2012 Bonds, the Indenture, the Developer, the Development,

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and certain provisions of the Act. All references herein to the Indenture and the Act are qualified in their entirety by reference to such documents and all references to the Series 2012 Bonds are qualified by reference to the definitive forms thereof and the information with respect thereto contained in the Indenture, the form of which appears as Appendix B attached hereto. The information herein under the caption "THE DEVELOPMENT" and "THE DEVELOPER" has been furnished by the Developer and has been included herein without independent investigation by the District, and the District makes no representation or warranty concerning the accuracy or completeness of such information. In addition, the Developer makes no representation or warranty as to the accuracy or completeness of information contained herein which has been furnished by any other party to the transactions contemplated hereby.

SUITABILITY FOR INVESTMENT

Investment in the Series 2012 Bonds poses certain economic risks. No dealer, broker, salesman or other person has been authorized by the District or the Underwriter to give any information or make any representations, other than those contained in this Official Statement. Additional information will be made available to each prospective investor, including the benefit of a site visit to the District, and the opportunity to ask questions of the District, as such prospective investor deems necessary in order to make an informed decision with respect to the purchase of the Series 2012 Bonds. Prospective investors are encouraged to request such additional information, visit the District and ask such questions. Such requests should be directed to:

Kevin Mulshine MBS Capital Markets, LLC 4890 West Kennedy Boulevard, Ste. 288 Tampa, Florida 33609 Phone: (813) 281-2700 (office)

While the Series 2012 Bonds are not subject to registration under the Securities Act of 1933, as amended (the "Securities Act"), the Underwriter has determined that the Series 2012 Subordinate Bonds are not suitable for investment by persons other than, and, as required by Chapter 189, Florida Statutes, will offer the Series 2012 Subordinate Bonds only to "accredited investors," as defined in Chapter 517, Florida Statutes, and the rules promulgated thereunder, however, the limitation of the initial offering to accredited investors does not denote restrictions on transfer in any secondary market for the Series 2012 Subordinate Bonds. Prospective investors in the Series 2012 Subordinate Bonds should have such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of an investment in the Series 2012 Subordinate Bonds and should have the ability to bear the economic risks of such prospective investment, including a complete loss of such investment.

REFUNDING PLAN

A portion of the proceeds of the Series 2012 Bonds are being used for the purpose of currently refunding the District's outstanding Series 2000A Bonds (the "Refunded Bonds" as previously defined). The Refunded Bonds will be redeemed on May 1, 2012 at a redemption price equal to the principal amount plus accrued interest to the date of redemption.

The portion of the proceeds of the Series 2012 Bonds used to currently refund the Refunded Bonds will be irrevocably placed in cash in an escrow fund (the "Escrow Fund") with U.S. Bank National Association, as escrow agent (the "Escrow Agent") pursuant to an Escrow Deposit

5

Agreement, dated as of April1, 2012 (the "Escrow Agreement") sufficient to pay the principal of, prepayment price and accrued interest on the Refunded Bonds on May 1, 2012.

Upon the deposit of such moneys, the Refunded Bonds shall no longer be deemed outstanding for purposes of the Indenture applicable to their issuance, the resolutions and other documents authorizing their issuance, and all liability of the District with respect thereto shall cease, terminate and be completely discharged and extinguished, and the holders thereof shall be entitled to payment solely out of the moneys and securities on deposit pursuant to the Escrow Agreement.

VERIFICATION

As of the delivery date of the Series 2012 Bonds, Causey Demgen & Moore Inc., certified public accountants, (the "Verification Agent") will verify, from information provided to them, the mathematical accuracy of the computations contained in schedules provided by MBS Capital Markets, LLC, to determine that the cash deposit to be held in the Escrow Fund will be sufficient to pay, when due, the principal of, prepayment price and interest on the Refunded Bonds.

THE DISTRICT

General

The District was established by the Rule which was adopted by the Land and Water Adjudicatory Commission on November 1, 1999, as amended in 2008 to annex new lands into the District. The District Lands are located approximately 13 miles from Kissimmee, 25 miles to the south of Orlando, 32 miles from the Orlando International Airport, and 15 miles south of Disney World within Polk County.

Legal Powers and Authority

The District is an independent unit of local government created in accordance with the Act. The Act provides a uniform method for the establishment of independent districts to manage and finance basic community development services, including capital infrastructure required for community developments throughout the State of Florida. The Act provides legal authority for community development districts (such as the District) to finance the acquisition, construction, operation and maintenance of the major infrastructure for community development.

The Act provides that community development districts have the power to issue general obligation, revenue and special assessment revenue debt obligations in any combination to pay all or part of the cost of infrastructure improvements authorized under the Act. The Act further provides that community development districts have the power under certain conditions to levy and assess ad valorem assessments or non-ad valorem assessments, including the Series 2012 Assessments, on all taxable real and tangible personal property within their boundaries to pay the principal of and interest on debt obligations issued and to provide for any sinking or other funds established in connection with any such debt obligation issues. Pursuant to the Act, such assessments may be assessed, levied, collected and enforced in the same manner and time as county property taxes.

Among other provisions, the Act gives the Board of Supervisors of the District the right: (i) to hold, control, and acquire by donation, purchase, condemnation or dispose of any public easements, dedications to public use, platted reservations for public purposes or any reservations for those purposes authorized by the Act and to make use of such easements, dedications, or reservations for any of the purposes authorized by the Act; (ii) to finance, fund, plan, establish,

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acquire, construct or reconstruct, enlarge or extend, equip, operate and maintain storm water management and control, water supply, sewer and wastewater management systems, or any combination thereof and to construct and operate connecting intercepting or outlet sewers and sewer mains and pipes and water mains, conduits, or pipelines in, along, and under any street, alley, highway, or other public place or ways, and to dispose of any effluent, residue or other byproducts of such system, or sewer system; (iii) to borrow money and issue the bonds, certificates, warrants, or other evidence of the District; and (iv) to exercise all of the powers necessary, convenient, incidental or proper in connection with any of the powers, duties or purposes authorized by the Act.

The Act does not empower the District to adopt and enforce land use plans or zoning ordinances and the Act does not empower the District to grant building permits. These functions are collectively performed by the County and their departments of government.

The Act exempts all property of the District from levy and sale by virtue of an execution and from judgment liens, but does not limit the right of any owner of bonds of the District to pursue any remedy for enforcement of any lien or pledge of the District in connection with such bonds, including the Series 2012 Bonds.

Board of Supervisors

The Act provides for a five-member Board of Supervisors (the "Board") to serve as a governing body of the District. Members of the Board of Supervisors must be residents of the State and citizens of the United States. Initially, the members were designated in the formative petition and appointed in the Rule establishing the District which was enacted on November 1, 1999. Within 90 days thereafter, the members were elected on an at-large basis by the owners of property within the District. Pursuant to the Act, six (6) years after establishment and after 250 qualified electors reside within the District, the seats of Board members whose terms expire are filled by votes of the qualified electors of the District. A qualified elector is a registered voter who is a resident of the District and the State and a citizen of the United States. Members serve four year terms with staggered expiration dates in the manner set forth in the Act. The current members of the Board and their terms of office are set forth below.

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Supervisor Expiration of Term Robert Zimbardi, Chairman November, 2012 David Lane, Vice Chairman November, 2012 LeRue “Skip” Stellfox, Assistant Secretary November, 2014 Donald A. Wright, Assistant Secretary November, 2014 Richard W. Kellogg, Assistant Secretary November, 2014

All Board members are resident electors of the District.

Gary Moyer serves as Secretary to the Board. The Act empowers the Board of Supervisors to adopt administrative rules and regulations with respect to any projects of the District, and to enforce penalties for the violation of such rules and regulations. The Act permits the Board of Supervisors to levy taxes under certain conditions, and to levy special assessments, and to charge, collect and enforce fees and user charges for use of District facilities.

District Manager and Other Consultants

The Act authorizes the Board to hire a District Manager as the chief administrative official of the District. The Act provides that the District Manager shall have charge and supervision of the works of the District and shall be responsible for (i) preserving and maintaining any improvement or facility constructed or erected pursuant to the provisions of the Act, (ii) maintaining and operating the equipment owned by the District, and (iii) performing such other duties as may be prescribed by the Board.

Severn Trent Management Services, Inc. has been retained as the firm to provide district management services for the District (in that capacity, the "District Manager"). The District Manager is actively involved in the management of more than 78 special districts throughout the State. The District Manager's office is located at Severn Trent Management Services, 210 North University Drive Suite 702, Coral Springs, Florida 33071.

The District Manager's typical responsibilities can briefly be summarized as overseeing directly and coordinating the planning, financing, purchasing, staffing, reporting and governmental liaison for the District. The District Manager's responsibilities include requisitioning moneys to pay construction contracts and the related accounting and reporting that is required by the Indenture.

The Act further authorizes the Board to hire such employees and agents as it deems necessary. Thus, the District has employed the services of Greenberg Traurig, P.A., Miami, Florida, as Bond Counsel; Atkins North America, Orlando, Florida as District Engineer; Hopping Green & Sams, P.A., Tallahassee, Florida, as District Counsel; and Fishkind & Associates, Inc., Orlando, Florida, as Assessment Consultant to prepare the Assessment Report attached hereto as Appendix A.

DESCRIPTION OF THE SERIES 2012 BONDS

General Description

The Series 2012 Bonds are issuable as fully registered bonds, without coupons, in denominations of $5,000 or any multiple thereof.

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The Series 2012 Bonds will be dated their date of issuance and delivery to the initial purchasers thereof and will bear interest payable on each May 1 and November 1, commencing November 1, 2012 (each, an "Interest Payment Date") and shall be computed on the basis of a 360-day year of twelve 30-day months. The Series 2012 Bonds will mature on May 1 of such years, in such amounts and at such rates as set forth on the cover page of this Official Statement.

Interest on each Series 2012 Bond will be payable on each Interest Payment Date as heretofore described in any coin or currency of the United States of America which, at the date of payment thereof, is legal tender for the payment of public and private debts. Except as otherwise provided in the Supplemental Indenture in connection with a book entry only system of registration of the Series 2012 Bonds, the payment of interest on the Series 2012 Bonds shall be made on each Interest Payment Date to the Owners of the Series 2012 Bonds by check or draft drawn on the Paying Agent and mailed on the applicable Interest Payment Date to each Owner as such Owner appears on the Bond Register maintained by the Registrar as of the close of business on the Regular Record Date, at his address as it appears on the Bond Register. Any interest on any Series 2012 Bond which is payable, but is not punctually paid or provided for on any Interest Payment Date (hereinafter called "Defaulted Interest") shall be paid to the Owner in whose name the Series 2012 Bond is registered at the close of business on a Special Record Date to be fixed by the Trustee, such date to be not more than fifteen (15) nor less than ten (10) days prior to the date of proposed payment. The Trustee will cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class, postage-prepaid, to each Owner of record as of the fifth (5th) day prior to such mailing, at his address as it appears in the Bond Register not less than ten (10) days prior to such Special Record Date. The foregoing notwithstanding, any Owner of Series 2012 Bonds in an aggregate principal amount of at least $1,000,000 shall be entitled to have interest paid by wire transfer to such Owner to the bank account number on file with the Paying Agent, upon requesting the same in a writing received by the Paying Agent at least fifteen (15) days prior to the relevant Interest Payment Date, which writing shall specify the bank, which shall be a bank within the continental United States, and bank account number to which interest payments are to be wired. Any such request for interest payments by wire transfer shall remain in effect until rescinded or changed, in a writing delivered by the Owner to the Paying Agent, and any such rescission or change of wire transfer instructions must be received by the Paying Agent at least fifteen (15) days prior to the relevant Interest Payment Date.

Each Series 2012 Bond shall bear interest from the Interest Payment Date to which interest has been paid next preceding the date of its authentication, unless the date of its authentication: (i) is an Interest Payment Date to which interest on such Series 2012 Bond has been paid, in which event such Series 2012 Bond shall bear interest from its date of authentication; or (ii) is prior to the first Interest Payment Date for the Series 2012 Bonds, in which event, such Series 2012 Bond shall bear interest from its date.

The Series 2012 Bonds will initially be registered in the name of Cede & Co. as nominee for The Depository Trust Company ("DTC"), which will act initially as securities depository for the Series 2012 Bonds and, so long as the Series 2012 Bonds are held in book-entry-only form, Cede & Co. will be considered the registered owner for all purposes hereof. See "Book-Entry Only System" below for more information about DTC and its book-entry only system.

Redemption Provisions

Optional Redemption of Series 2012 Senior Bonds. The Series 2012 Senior Bonds may, at the option of the District, be called for redemption prior to maturity as a whole or in part at any time on or after May 1, 2022 (less than all Series 2012 Senior Bonds to be selected in such manner as is specified by the District in writing), at a Redemption Price equal to the principal amount of the

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Series 2012 Senior Bonds (or portion thereof to be redeemed) plus accrued interest from the most recent Interest Payment Date to the redemption date.

Mandatory Redemption in Part of Series 2012 Senior Bonds. The Series 2012 Senior Bonds which are Term Bonds maturing on May 1, 2027 are subject to mandatory redemption in part by the District by lot prior to their scheduled maturity from moneys in the Series 2012A-1 Sinking Fund Account established under the Supplemental Indenture in satisfaction of applicable Amortization Installments (as defined in the Master Indenture) at the Redemption Price of the principal amount thereof, without premium, together with accrued interest to the date of redemption on May 1 of the years and in the principal amounts set forth below:

Year Principal Year Principal

(May 1) Amount (May 1) Amount

2026

$790,000 2027

$825,000*

*Final Maturity The Series 2012 Senior Bonds which are Term Bonds maturing on May 1, 2031 are subject to

mandatory redemption in part by the District by lot prior to their scheduled maturity from moneys in the Series 2012A-1 Sinking Fund Account established under the Supplemental Indenture in satisfaction of applicable Amortization Installments (as defined in the Master Indenture) at the Redemption Price of the principal amount thereof, without premium, together with accrued interest to the date of redemption on May 1 of the years and in the principal amounts set forth below:

Year Principal Year Principal

(May 1) Amount (May 1) Amount

2028 $860,000 2030 $945,000

2029 900,000 2031 985,000 *

*Final Maturity

As more particularly set forth in the Master Indenture and Supplemental Indenture, any Series 2012 Bonds that are purchased by the District with amounts held to pay an Amortization Installment will be canceled and the principal amount so purchased will be applied as a credit against the applicable Amortization Installment of Series 2012 Bonds. Amortization Installments are also subject to recalculation, as provided in the Supplemental Indenture, as the result of the redemption of Series 2012 Bonds so as to reamortize the remaining Outstanding principal balance of the Series 2012 Bonds (including any Series 2012 Bonds which are Serial Bonds) over the remaining term thereof in substantially equal annual installments of principal and interest corresponding to the Series 2012 Assessments.

Extraordinary Mandatory Redemption in Whole or in Part of Series 2012 Senior Bonds. The Series 2012 Senior Bonds are subject to extraordinary mandatory redemption prior to maturity by the District, in whole or in part on any date, at an extraordinary mandatory redemption price equal to 100% of the principal amount of the Series 2012 Senior Bonds to be redeemed, plus interest accrued to the redemption date, as follows:

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(i) from Prepayments deposited into the General Redemption Account of the Series 2012 Bond Redemption Fund following the payment in whole or in part of Special Assessments on any portion of the District Lands in accordance with the provisions of the Second Supplemental Indenture;

(ii) from moneys, if any, on deposit in the Series 2012A-1 Debt Service Reserve Account, together with other moneys available therefor, sufficient to pay and redeem all Series 2012 Senior Bonds Outstanding and accrued interest thereon to the redemption date;

(iii) from amounts on deposit in the Series 2012A-1 Debt Service Reserve Account in excess of the Series 2012A-1 Debt Service Reserve Requirement and transferred to the Series 2012A-1 Redemption Account of the Series 2012 Bond Redemption Fund in accordance with the Master Indenture and the Second Supplemental Indenture; and

(iv) from Foreclosure Proceeds deposited into the General Redemption Account of the Series 2012 Bond Redemption Fund in accordance with the provisions of the Supplemental Indenture. Pursuant to the Supplemental Indenture, the District is required to remit to the Trustee any and all Foreclosure Proceeds as soon as practicable after receipt. Prior to Accession and so long as the Series 2012 Senior Bonds remain Outstanding, the Trustee shall transfer all Foreclosure Proceeds received the Series 2012 Bond Redemption Fund for the redemption of Series 2012A-1 Bonds pursuant to the Supplemental Indenture. The term “Foreclosure Proceeds” is defined in the Supplemental Indenture to mean the proceeds derived from foreclosure proceedings commenced by the District pursuant to Florida Statutes Section 170.10, as amended, or any successor provision, or from the sale of any portion of the District Lands in lieu of foreclosure, against any portion of the District Lands on which Special Assessments have been levied and direct billed by the District.

The redemption described in (i) above shall be on a pro rata basis with the Series 2012A-2 Bonds except, prior to Accession, during the continuance of an Event of Default there shall be no redemption of Series 2012A-2 Bonds, unless no Series 2012 Senior Bonds shall then be Outstanding. As used in the preceding sentence, “on a pro rata basis” means that the moneys available to be applied to satisfy the requirements above shall be applied in a manner such that the ratio of the principal amount of the Series 2012A-1 Bonds to be so redeemed bears to the principal amount of the Series 2012A-2 Bonds to be so redeemed is the same as the ratio of the outstanding principal balance of the Series 2012A-1 Bonds bears to the outstanding principal balance of the Series 2012A-2 Bonds.

Optional Redemption of Series 2012 Subordinate Bonds. The Series 2012 Subordinate Bonds may, at the option of the District, be called for redemption prior to maturity as a whole or in part at any time on or after May 1, 2022 (less than all Series 2012 Subordinate Bonds to be selected in such manner as is specified by the District in writing), at a Redemption Price equal to the principal amount of the Series 2012 Subordinate Bonds (or portion thereof to be redeemed) plus accrued interest from the most recent Interest Payment Date to the redemption date.

Mandatory Redemption in Part of Series 2012 Subordinate Bonds. The Series 2012 Subordinate Bonds which are Term Bonds maturing on May 1, 2021 are subject to mandatory redemption in part by the District by lot prior to their scheduled maturity from moneys in the Series 2012A-2 Sinking Fund Account established under the Supplemental Indenture in satisfaction of applicable Amortization Installments (as defined in the Master Indenture) at the Redemption Price of the principal amount thereof, without premium, together with accrued interest to the date of redemption on May 1 of the years and in the principal amounts set forth below:

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Year Principal Year Principal (May 1) Amount (May 1) Amount

2013 $235,000 2018 $315,000

2014 250,000 2019 335,000

2015 265,000 2020 355,000

2016 280,000 2021 375,000 *

2017 300,000

*Final Maturity

The Series 2012 Subordinate Bonds which are Term Bonds maturing on May 1, 2031 are subject to mandatory redemption in part by the District by lot prior to their scheduled maturity from moneys in the Series 2012A-2 Sinking Fund Account established under the Supplemental Indenture in satisfaction of applicable Amortization Installments (as defined in the Master Indenture) at the Redemption Price of the principal amount thereof, without premium, together with accrued interest to the date of redemption on May 1 of the years and in the principal amounts set forth below:

Year Principal Year Principal (May 1) Amount (May 1) Amount

2022 $400,000 2027 $535,000

2023 420,000 2028 570,000 2024 450,000 2029 605,000 2025 475,000 2030 645,000 2026 505,000 2031 685,000 *

*Final Maturity

As more particularly set forth in the Master Indenture and Supplemental Indenture, any Series 2012 Bonds that are purchased by the District with amounts held to pay an Amortization Installment will be canceled and the principal amount so purchased will be applied as a credit against the applicable Amortization Installment of Series 2012 Bonds. Amortization Installments are also subject to recalculation, as provided in the Supplemental Indenture, as the result of the redemption of Series 2012 Bonds so as to reamortize the remaining Outstanding principal balance of the Series 2012 Bonds (including any Series 2012 Bonds which are Serial Bonds) over the remaining term thereof in substantially equal annual installments of principal and interest corresponding to the Series 2012 Assessments.

Extraordinary Mandatory Redemption in Whole or in Part of Series 2012 Subordinate Bonds. The Series 2012 Subordinate Bonds are subject to Extraordinary Mandatory Redemption prior to maturity, in whole or in part on any date, in the manner determined by the Bond Registrar at the Redemption Price of 100% of the principal amount thereof, without premium, together with accrued interest to the date of redemption, if and to the extent that any one or more of the following shall have occurred:

(i) from Prepayments deposited into the Series 2012A-2 Bond Redemption Fund following the payment in whole or in part of Series 2012 Assessments on any portion of the District Lands as provided for in the Supplemental Indenture;

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(ii) from excess moneys transferred from the Series 2012A-2 Revenue Account of the Revenue Fund to the Series 2012A-2 Bond Redemption Fund in accordance with the Indenture; and

(iii) from amounts on deposit in the Series 2012A-2 Debt Service Reserve Account in excess of the Debt Service Reserve Requirement for the Series 2012 Subordinate Bonds and transferred to the Series 2012A-2 Bond Redemption Fund in accordance with the Indenture.

The redemption described in (i) above shall be on a pro rata basis with the Series 2012A-2 Bonds except that no such redemption shall occur prior to Accession during the continuance of an Event of Default unless at the time no Series 2012A-1 Bonds shall be Outstanding. As used in the preceding sentence, “on a pro rata basis” means that the moneys available to be applied to satisfy the requirements above shall be applied in a manner such that the ratio of the principal amount of the Series 2012A-1 Bonds to be so redeemed bears to the principal amount of the Series 2012A-2 Bonds to be so redeemed is the same as the ratio of the outstanding principal balance of the Series 2012A-1 Bonds bears to the outstanding principal balance of the Series 2012A-2 Bonds.

If less than all of the Series 2012 Bonds of any one maturity shall be called for redemption, the particular Series 2012 Bonds to be redeemed shall be selected by lot in such reasonable manner as the Bond Registrar in its discretion may determine. The portion of any Series 2012 Bonds to be redeemed shall be in an Authorized Denomination and, in selecting the Series 2012 Bonds to be redeemed, the Bond Registrar shall treat each such Series 2012 Bond as representing that number of Series 2012 Bonds which is obtained by dividing the principal amount of such Series 2012 Bond by an Authorized Denomination (such amount being hereafter referred to as the "unit of principal amount").

If it is determined that one or more, but not all, of the units of principal amount represented by any such Series 2012 Bond is to be called for redemption, then upon notice of intention to redeem such unit or units of principal amount as provided below, the registered Owner of such Series 2012 Bond, upon surrender of such Series 2012 Bond to the Paying Agent for payment to such registered Owner of the redemption price of the unit or units of principal amount called for redemption, shall be entitled to receive a new Series 2012 Bond or Bonds in the aggregate principal amount of the unredeemed balance of the principal amount of such Series 2012 Bond. New Series 2012 Bonds representing the unredeemed balance of the principal amount shall be issued to the Owner thereof without any charge therefor. If the Owner of any Series 2012 Bond of a denomination greater than the unit of principal amount to be redeemed shall fail to present such Series 2012 Bond to the Paying Agent for payment in exchange as aforesaid, such Series 2012 Bond shall, nevertheless, become due and payable on the date fixed for redemption to the extent of the unit or units of principal amount called for redemption.

Notice of Redemption

The District shall establish each redemption date, other than in the case of a mandatory redemption, in which case the Trustee shall establish the redemption date, and the District or the Trustee, as the case may be, shall notify the Bond Registrar in writing of such redemption date on or before the forty-fifth (45th) day next preceding the date fixed for redemption, which notice shall set forth the terms of the redemption and the aggregate principal amount of Series 2012 Bonds so to be redeemed. The Trustee shall cause notice of redemption to be mailed at least thirty but not more than forty-five days prior to the date of redemption to all registered owners of Bonds to be redeemed (as such owners appear on the books of the Registrar on the fifth (5th) day prior to such mailing) and to certain additional parties as set forth in the Indenture; provided, however, that failure to mail any

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such notice or any defect in the notice or the mailing thereof shall not affect the validity of the redemption of the Bonds for which such notice was duly mailed in accordance with the Indenture. If less than all of the Bonds shall be called for redemption, the notice of redemption shall specify the Bonds to be redeemed. On the redemption date, the Bonds called for redemption will be payable at the designated corporate trust office of the Paying Agent and on such date interest shall cease to accrue, such Bonds shall cease to be entitled to any benefit under the Indenture and such Bonds shall not be deemed to be outstanding under the provisions of the Indenture and the registered owners of such Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. If the amount of funds so deposited with the Trustee, or otherwise available, is insufficient to pay the redemption price and interest on all Bonds so called for redemption on such date, the Trustee shall redeem and pay on such date an amount of such Bonds for which such funds are sufficient, selecting the Bonds to be redeemed by lot from among all such Bonds called for redemption on such date, and interest on any Bonds not paid shall continue to accrue, as provided in the Indenture.

If at the time of mailing of a notice of an optional redemption or purchase, the Issuer shall not have deposited with the Trustee or Paying Agent moneys sufficient to redeem or purchase all the Bonds called for redemption or purchase, such notice shall state that it is subject to the deposit of the redemption or purchase moneys with the Trustee or Paying Agent, as the case may be, not later than the opening of business on the redemption or purchase date, and such notice shall be of no effect unless such moneys are deposited.

No Acceleration

The Indenture does not permit the acceleration of the principal of the Series 2012 Bonds upon an Event of Default (as defined in the Indenture). See "SECURITY FOR AND SOURCE OF PAYMENT OF BONDS - Enforcement and Collection of Series 2012 Assessments" and the Master Indenture which is included herein as Appendix B.

Book-Entry Only System

The information in this caption concerning The Depository Trust Company, New York, New York, ("DTC") and DTC's book-entry system has been obtained from DTC and neither the District nor the Underwriter makes any representation or warranty or takes any responsibility for the accuracy or completeness of such information.

DTC will act as securities depository for the Series 2012 Bonds. The Series 2012 Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond certificate will be issued for each maturity of the Series 2012 Bonds and will be deposited with DTC. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants (the "Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned

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subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants"). DTC has a Standard and Poor's rating of AA+. The DTC rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of the Series 2012 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for such Series 2012 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2012 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2012 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of the Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2012 Bonds, except in the event that use of the book-entry system for the Series 2012 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2012 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2012 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2012 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2012 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping an account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements made among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Redemption notices shall be sent to DTC. If less than all of the Series 2012 Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such Series 2012 Bonds, as the case may be, to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2012 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2012 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Series 2012 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the District or the Registrar on the payable date in accordance

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with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Registrar or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District and/or the Paying Agent for the Series 2012 Bonds. Disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of the Direct and Indirect Participants.

DTC may discontinue providing its services as securities depository with respect to the Series 2012 Bonds at any time by giving reasonable notice to the District. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2012 Bond certificates are required to be printed and delivered.

The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Series 2012 Bond certificates will be printed and delivered to DTC.

The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the District believes to be reliable, but takes no responsibility for the accuracy thereof.

NEITHER THE DISTRICT NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO THE DTC PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEE WITH RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE FOR THE DTC PARTICIPANTS, THE INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS OF THE SERIES 2012 BONDS. THE DISTRICT CANNOT AND DOES NOT GIVE ANY ASSURANCES THAT DTC, THE DTC PARTICIPANTS OR OTHERS WILL DISTRIBUTE PAYMENTS OF PRINCIPAL OF OR INTEREST ON THE SERIES 2012 BONDS PAID TO DTC OR ITS NOMINEE, AS THE REGISTERED OWNER, OR PROVIDE ANY NOTICES TO THE BENEFICIAL OWNERS OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC WILL ACT IN THE MANNER DESCRIBED IN THIS LIMITED OFFERING MEMORANDUM.

SECURITY FOR AND SOURCE OF PAYMENT OF BONDS

General

The Series 2012 Bonds are payable from and secured by the Assessments levied and collected by or on behalf of the District pursuant to Chapter 170 and Section 190.022, Florida Statutes, as amended from time to time, together with the interest specified by resolution adopted by the District, the interest specified in Chapter 170, Florida Statutes, if any such interest is collected by or on behalf of the District, and any applicable penalties collected by or on behalf of the District, together with any and all amounts received by the District from the sale of tax certificates or otherwise from the collection of delinquent Assessments, which are imposed, levied and collected by the District with respect to property specially benefited by the 2000A Project (the "Series 2012 Assessments")

The Series 2012 Assessments represent an allocation of the costs of the 2000A Project, including bond financing costs, to the lands within the District benefiting from the 2000A Project in accordance with the Assessment Report, which report has been adopted by the District and is set forth herein as Appendix A.

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The Series 2012 Bonds are additionally secured by amounts on deposit in the Funds and Accounts, other than the Rebate Fund, created pursuant to the Indenture (the "Series 2012 Pledged Funds" and together with the Series 2012 Assessments, the "Series 2012 Trust Estate"; provided, however, that until such time as Accession has occurred, the lien and pledge of the Series 2012 Trust Estate to the Series 2012 Subordinate Bonds shall, as provided in the Supplemental Indenture, be subordinate and inferior to the lien and pledge thereof to the Series 2012 Senior Bonds, including, but not limited to, the rights to pay and enforcement of rights and remedies under the Supplemental Indenture and under the Master Indenture.

NEITHER THE SERIES 2012 BONDS NOR THE INTEREST AND PREMIUM, IF ANY, PAYABLE THEREON SHALL CONSTITUTE A GENERAL OBLIGATION OR GENERAL INDEBTEDNESS OF THE DISTRICT WITHIN THE MEANING OF THE CONSTITUTION AND LAWS OF FLORIDA. THE SERIES 2012 BONDS AND THE INTEREST AND PREMIUM, IF ANY, PAYABLE THEREON DO NOT CONSTITUTE EITHER A PLEDGE OF THE FULL FAITH AND CREDIT OF THE DISTRICT OR A LIEN UPON ANY PROPERTY OF THE DISTRICT OTHER THAN AS PROVIDED IN THE MASTER INDENTURE OR IN THE SUPPLEMENTAL INDENTURE. NO OWNER OR ANY OTHER PERSON SHALL EVER HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY AD VALOREM TAXING POWER OF THE DISTRICT OR ANY OTHER PUBLIC AUTHORITY OR GOVERNMENTAL BODY TO PAY DEBT SERVICE OR TO PAY ANY OTHER AMOUNTS REQUIRED TO BE PAID PURSUANT TO THE MASTER INDENTURE, THE SUPPLEMENTAL INDENTURE, OR THE SERIES 2012 BONDS. RATHER, DEBT SERVICE AND ANY OTHER AMOUNTS REQUIRED TO BE PAID PURSUANT TO THE MASTER INDENTURE, THE SUPPLEMENTAL INDENTURE, OR THE SERIES 2012 BONDS, SHALL BE PAYABLE SOLELY FROM, AND SHALL BE SECURED SOLELY BY, THE SERIES 2012 ASSESSMENTS AND THE SERIES 2012 PLEDGED REVENUES PLEDGED TO THE SERIES 2012 BONDS, ALL AS PROVIDED HEREIN, IN THE MASTER INDENTURE AND IN THE SUPPLEMENTAL INDENTURE.

No Parity Bonds

Subsequent to the issuance of the Series 2012 Bonds, the District may cause one or more Series of Additional Bonds or Refunding Bonds (as defined in the Master Indenture) to be issued pursuant to the Indenture, subject to the terms and conditions thereof. Additional Bonds may be issued for the purpose of paying the Cost of any Additional Series Project or any portion thereof or paying the Cost of completing a Series Project. Refunding Bonds may be issued for the purpose of refunding (including advance refunding) all or part of the Bonds then Outstanding of any one or more Series or maturities within a Series. Each Series of Additional Bonds and Refunding Bonds shall be secured separately from each other Series of Outstanding Bonds, except as otherwise provided in the Supplemental Indenture authorizing a Series of Bonds. In the Supplemental Indenture authorizing the Series 2012 Bonds, the District covenants and agrees that, so long as there are any Series 2012 Bonds Outstanding, it shall not cause or permit to be caused any lien, charge or claim against the Series 2012 Trust Estate. Except as set forth in the next succeeding sentence, the District further covenants and agrees in the Supplemental Indenture that, so long as there are any Series 2012A-2 Bonds Outstanding and Accession shall not have occurred, it shall not incur additional indebtedness, whether in the form of bonds or otherwise, secured by assessments levied upon the same property that is subject to Special Assessments without the consent of the Holders of a majority in aggregate principal amount of the Series 2012A-2 Bonds at the time Outstanding. Notwithstanding the preceding sentence, the District: (i) may incur additional indebtedness on a parity basis with the Series 2012A-2 Bonds Outstanding for the purpose of effecting repairs to or replacements of property, facilities or equipment of the District; and (ii) may incur additional indebtedness on a basis subordinate to the Series 2012A-2 Bonds for any legal purpose. However, the District may issue a Series of Bonds that are payable from assessments

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(other than the Series 2012 Assessments) levied on the lands in Solivita® that benefit from the Series Project financed by such Series of Bonds. WHILE NO FUTURE ADDITIONAL BONDS WILL BE PAYABLE FROM OR SECURED BY THE ASSESSMENTS PLEDGED AS SECURITY FOR THE SERIES 2012 BONDS, THE DISTRICT, THE COUNTY, THE SCHOOL BOARD OF POLK COUNTY, FLORIDA, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF MAY IN THE FUTURE IMPOSE, LEVY AND COLLECT ASSESSMENTS AND TAXES THE LIENS OF WHICH WILL BE CO-EQUAL WITH THE LIEN OF THE ASSESSMENTS WHICH INCLUDES THE SERIES 2012 ASSESSMENTS SECURING THE SERIES 2012 BONDS. See "SECURITY FOR AND SOURCE OF PAYMENT OF BONDS - Enforcement and Collection of Series 2012 Assessments" herein.

Funds and Accounts

The Indenture requires that the Trustee establish the following funds and accounts: within the Acquisition and Construction Fund, a "Series 2012 Acquisition and Construction Account;" within the Revenue Fund, a "Series 2012 Revenue Account;" within the Debt Service Fund a "Series 2012A-1 Principal Account," a "Series 2012A-1 Interest Account," a "Series 2012A-1 Sinking Fund Account, a "Series 2012A-2 Principal Account," a "Series 2012A-2 Interest Account," and a "Series 2012A-2 Sinking Fund Account;" within the Debt Service Reserve Fund a "Series 2012A-1 Debt Service Reserve Account” and a "Series 2012A-1 Debt Service Reserve Account;" and a “Series 2012 Bond Redemption Fund” and therein a “Series 2012A-1 Bond Redemption Account,” a “Series 2012A-2 Bond Redemption Account” and a “General Redemption Account.”

Reserve Account Requirements; Series 2012A-1 Reserve Account and Series 2012A-2 Reserve Account

The Supplemental Indenture creates a Series 2012A-1 Reserve Account and a Series 2012A-2 Reserve Account. The “Series 2012A-1 Debt Service Reserve Requirement” with respect to the Series 2012 Senior Bonds is an amount equal to 50% of the Maximum Annual Debt Service Requirement for Outstanding Series 2012 Senior Bonds calculated as of the date of original issuance thereof. The “Series 2012A-2 Debt Service Reserve Requirement” with respect to the Series 2012 Subordinate Bonds is an amount equal to 50% of the Maximum Annual Debt Service Requirement for Outstanding Series 2012 Subordinate Bonds calculated as of the date of original issuance thereof.

Amounts on deposit in the Series 2012A-1 Debt Service Reserve Account shall be used only for the purpose of making payments into the Series 2012A-1 Interest Account, and the Series 2012A-1 Sinking Fund Account to pay debt service on the Series 2012A-1 Bonds, when due, without distinction as to Series 2012A-1 Bonds and without privilege or priority of one Series 2012A-1 Bond over another, to the extent the moneys on deposit in the Series 2012A-1 Interest Account, and the Series 2012A-1 Sinking Fund Account and available therefor are insufficient and for no other purpose, except as specified in the Supplemental Indenture.

Except as provided below, amounts on deposit in the Series 2012A-2 Debt Service Reserve Account shall be used only for the purpose of making payments into the Series 2012A-2 Interest Account, and the Series 2012A-2 Sinking Fund Account to pay Debt Service on the Series 2012A-2 Bonds, when due, without distinction as to Series 2012A-2 Bonds and without privilege or priority of one Series 2012A-2 Bond over another, to the extent the moneys on deposit in such Accounts therein and available therefor are insufficient; provided, however, that no such transfer shall be made unless the amount then on deposit in the Series 2012A-1 Interest Account and the Series 2012A-1 Sinking Fund Account sufficient to pay all of the debt service coming due on the Series 2012A-1 Bonds in the current Bond Year and the amount on deposit in the Series 2012A-1 Debt Service Reserve Account is equal to the Series 2012A-1 Debt Service Reserve Requirement. Unless Accession shall have occurred already, if at such time: (A) the amount then on deposit in the Series 2012A-1 Interest

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Account, the Series 2012A-1 Sinking Fund Account and the Series 2012A-1 Debt Service Reserve Account shall be insufficient to pay all of the debt service coming due on the Series 2012A-1 Bonds in the current Bond Year, amounts on deposit in the Series 2012A-2 Debt Service Reserve Account shall be used for the purpose of making payments into the Series 2012A-1 Interest Account, and the Series 2012A-1 Sinking Fund Account to pay Debt Service on the Series 2012A-1 Bonds, when due, without distinction as to Series 2012A-1 Bonds and without privilege or priority of one Series 2012A-1 Bond over another, to the extent of such insufficiency; or (B) the amount then on deposit in the Series 2012A-1 Interest Account and the Series 2012A-1 Sinking Fund Account shall be sufficient to pay all of the debt service coming due on the Series 2012A-1 Bonds in the current Bond Year, but the amount on deposit in the Series 2012A-1 Debt Service Reserve Account is less than the Series 2012A-1 Debt Service Reserve Requirement, amounts on deposit in the Series 2012A-2 Debt Service Reserve Account shall be transferred to the Series 2012A-1 Debt Service Reserve Account until the Series 2012A-1 Debt Service Reserve Requirement has been satisfied.

On the forty-fifth (45th) day preceding each Redemption Date (or, if such forty-fifth (45th) day is not a Business Day, on the first Business Day preceding such forty-fifth (45th) day), the Trustee is hereby authorized and directed to recalculate the Series 2012A-1 Debt Service Reserve Requirement and to transfer any excess on deposit in the Series 2012A-1 Debt Service Reserve Account into the Series 2012A-1 Redemption Account of the Series 2012 Bond Redemption Fund and applied to the extraordinary mandatory redemption of the Series 2012A-1 Bonds.

On the earliest date on which there is on deposit in the Series 2012A-1 Debt Service Reserve Account, sufficient monies, after taking into account other monies available therefor, to pay and redeem all of the Outstanding Series 2012A-1 Bonds, together with accrued interest and redemption premium, if any, on such Series 2012A-1 Bonds to the earliest date of redemption permitted therein and herein, then the Trustee shall transfer the amount on deposit in the Series 2012A-1 Debt Service Reserve Account into the Series 2012A-1 Redemption Account in the Series 2012 Bond Redemption Fund to pay and redeem all of the Outstanding Series 2012A-1 Bonds on the earliest date permitted for redemption therein and in the Indenture.

On the forty-fifth (45th) day preceding each Redemption Date (or, if such forty-fifth (45th) day is not a Business Day, on the first Business day preceding such forty-fifth (45th) day), the Trustee is hereby authorized and directed to recalculate the Series 2012A-2 Debt Service Reserve Requirement and to transfer any resulting excess on deposit in the Series 2012A-2 Debt Service Reserve Account into the Series 2012A-2 Redemption Account in the Series 2012 Bond Redemption Fund and applied to the extraordinary redemption of Series 2012A-2 Bonds; provided, however, that, unless and until such time as Accession shall have occurred, no such transfer shall be made unless the amount then on deposit in the Series 2012A-1 Interest Account, and the Series 2012A-1 Sinking Fund Account to pay Debt Service on the Series 2012A-1 Bonds are sufficient to pay all of the debt service coming due thereon in the current Bond Year and the amount on deposit in the Series 2012A-1 Debt Service Reserve Account is equal to the Series 2012A-1 Debt Service Reserve Requirement.

On the earliest date on which there is on deposit in the Series 2012A-2 Debt Service Reserve Account, sufficient monies, after taking into account other monies available therefor, to pay and redeem all of the Outstanding Series 2012A-2 Bonds, together with accrued interest and redemption premium, if any, on such Series 2012A-2 Bonds to the earliest date of redemption permitted therein and herein, then the Trustee shall transfer the amount on deposit in the Series 2012A-2 Debt Service Reserve Account into the Series 2012A-2 Redemption Account in the Series 2012 Bond Redemption Fund to pay and redeem all of the Outstanding Series 2012A-2 Bonds on the earliest date permitted for redemption therein in the Indenture; provided, however, that, unless and until such time as Accession has occurred, no such transfer shall be made unless the amount then on deposit in the Series 2012A-1 Interest Account, and the Series 2012A-1 Sinking Fund Account to pay debt service on the Series 2012A-1 Bonds are sufficient to pay all of the debt service coming due

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thereon in the current Bond Year and the amount on deposit in the Series 2012A-1 Debt Service Reserve Account is equal to the Series 2012A-1 Debt Service Reserve Requirement.

Flow of Funds

The Second Supplemental Indenture directs the Trustee to deposit into the Series 2012 Revenue Account any and all amounts required to be deposited therein by the Indenture and any other amounts or payments specifically designated by the District pursuant to a written direction or by a Supplemental Indenture. The Series 2012 Revenue Account shall be held by the Trustee separate and apart from all other Funds and Accounts held under the Indenture and from all other moneys of the Trustee. The Second Supplemental Indenture provides that unless and until such time as Accession has occurred, the Trustee shall transfer from amounts on deposit in the Series 2012 Revenue Account to the Funds and Accounts designated below, the following amounts, at the following times and in the following order of priority, except that, following application pursuant to clause FOURTH below, remaining Foreclosure Proceeds shall be applied pursuant to the extraordinary redemption of Series 2012A-1 Bonds:

FIRST, no later than the Business Day preceding November 1, 2012, to be applied to the payment of interest on the Series 2012A-1 Bonds due on the next succeeding May 1 and November 1, and no later than the Business Day next preceding each May 1 thereafter to the Series 2012A-1 Interest Account, an amount from the Series 2012 Revenue Account equal to the interest on the Series 2012A-1 Bonds becoming due on the next succeeding May 1 and November 1, less any amounts on deposit in the Series 2012A-1 Interest Account not previously credited;

SECOND, no later than the Business Day next preceding each stated maturity date of the Series 2012A-1 Bonds, to the Series 2012A-1 Principal Account, an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012A-1 Bonds Outstanding maturing on such May 1, if any, less any amounts on deposit in the Series 2012A-1 Principal Account not previously credited;

THIRD, no later than the Business Day next preceding each May 1, commencing May 1, 2026, to the Series 2012A-1 Sinking Fund Account, an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012A-1 Bonds subject to sinking fund redemption on such May 1, less any amount on deposit in the Series 2012A-1 Sinking Fund Account not previously credited;

FOURTH, no later than the Business Day next preceding each Interest Payment Date while Series 2012A-1 Bonds remain Outstanding, to the Series 2012A-1 Debt Service Reserve Account, an amount from the Series 2012 Revenue Account equal to the amount, if any, which is necessary to make the amount on deposit therein equal the Series 2012A-1 Debt Service Reserve Requirement;

FIFTH, no later than the Business Day preceding November 1, 2012, to be applied to the payment of interest on the Series 2012A-2 Bonds due on the next succeeding May 1 and November 1, and no later than the Business Day next preceding each May 1 thereafter to the Series 2012A-2 Interest Account, an amount from the Series 2012 Revenue Account equal to the interest on the Series 2012A-2 Bonds becoming due on the next succeeding May 1 and November 1, less any amounts on deposit in the Series 2012A-2 Interest Account not previously credited;

SIXTH, no later than the Business Day next preceding each stated maturity date of the Series 2012A-2 Bonds, to the Series 2012A-2 Principal Account, an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012A-2 Bonds Outstanding maturing on such May 1, if any, less any amounts on deposit in the Series 2012A-2 Principal Account not previously credited;

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SEVENTH, no later than the Business Day next preceding each May 1, commencing May 1, 2013, to the Series 2012A-2 Sinking Fund Account, an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012A-2 Bonds subject to sinking fund redemption on such May 1, less any amount on deposit in the Series 2012A-2 Sinking Fund Account not previously credited;

EIGHTH, upon receipt but no later than the Business Day next preceding each Interest Payment Date while Series 2012A-2 Bonds remain Outstanding, to the Series 2012A-2 Debt Service Reserve Account, an amount from the Series 2012 Revenue Account equal to the amount, if any, which is necessary to make the amount on deposit therein equal the Series 2012A-2 Debt Service Reserve Requirement; and

NINTH, subject to the following paragraph, the balance of any moneys remaining after making the foregoing deposits shall remain therein.

On each November 2 of each calendar year, the Trustee shall withdraw any moneys held for the credit of the Series 2012 Revenue Account which are not otherwise required to be deposited pursuant to this provision and deposit such moneys to the credit of the Series 2012 Bond Redemption Fund for the redemption of the Series 2012A-2 Bonds in accordance with the Supplemental Indenture and the Series 2012A-2 Bonds.

(ii) After Accession has occurred, the Trustee shall transfer from amounts on deposit in the Series 2012 Revenue Account to the Funds and Accounts designated below, the following amounts, at the following times and in the following order of priority:

FIRST, no later than the Business Day preceding November 1, 2012, to be applied to the payment of interest on the Series 2012 Bonds due on the next succeeding May 1 and November 1, and no later than the Business Day next preceding each May 1 thereafter to the Series 2012A-1 Interest Account and the Series 2012A-2 Interest Account an amount from the Series 2012 Revenue Account equal to the interest on the Series 2012 Bonds becoming due on the next succeeding May 1 and November 1, less any amounts on deposit in the Series 2012A-1 Interest Account and the Series 2012A-2 Interest Account, as the case may be, not previously credited;

SECOND, no later than the Business Day next preceding each stated maturity of the Series 2012 Bonds, to the Series 2012A-1 Principal Account and the Series 2012A-2 Principal Account an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012 Bonds Outstanding maturing on such May 1, if any, less any amounts on deposit in the Series 2012A-1 Principal Account and the Series 2012A-2 Principal Account, as the case may be, not previously credited;

THIRD, no later than the Business Day next preceding each May 1, commencing on the date the next sinking fund installment on the Series 2012 Bonds shall be due and payable, to the Series 2012A-1 Sinking Fund Account and the Series 2012A-2 Sinking Fund Account an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012 Bonds subject to sinking fund redemption on such May 1, less any amount on deposit in the Series 2012A-1 Sinking Fund Account and the Series 2012A-2 Sinking Fund Account, as the case may be, not previously credited;

FOURTH, no later than the Business Day next preceding each Interest Payment Date while Series 2012 Bonds remain Outstanding, to the Series 2012A-1 Debt Service Reserve Account and the Series 2012A-2 Debt Service Reserve Account an amount from the Series 2012 Revenue Account equal to the amount, if any, which is necessary to make the amount on deposit in the Series 2012A-1 Debt Service Reserve Account equal the Series 2012A-1 Debt Service Reserve Requirement and the

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amount on deposit in the Series 2012A-2 Debt Service Reserve Account equal the Series 2012A-2 Debt Service Reserve Requirement; and

FIFTH, subject to the following paragraph the balance of any moneys remaining after making the foregoing deposits shall remain therein.

In the event that the amounts to be applied pursuant to clauses FIRST through FOURTH are insufficient to satisfy the requirements of any such clause, the moneys available to be applied to satisfy the requirements of such clause shall be applied in a manner such that each of the respective accounts for the Series 2012A-1 Bonds and the Series 2012A-2 Bonds mentioned in such clause receives the same percentage of the requirement for such account as the percentage of moneys available to be applied to satisfy the requirements of such clause bears to the combined funding requirements for the accounts mentioned in such clause.

Accession of Series 2012 Subordinate Bonds

The Series 2012 Subordinate Bonds shall accede to the status of complete parity with the Series 2012 Senior Bonds as to lien upon the Series 2012 Trust Estate upon satisfaction of the following conditions: (a) The District shall certify that it is current in all deposits into the various funds and accounts established under the Indenture, that it has made all payments required by the Indenture and that it is in compliance with all of its obligations under the Indenture; (b) The Series 2012A-2 Debt Service Reserve Account shall contain an amount equal to the Series 2012A-2 Debt Service Reserve Requirement upon Accession; and (c) The District shall have received from written confirmation that, upon Accession, S&P shall rate the Series 2012 Senior Bonds and the Series 2012 Subordinate Bonds at the same rating as it rated the Series 2012 Senior Bonds prior to Accession.

Upon satisfaction of the above conditions, the District shall cause the Trustee to provide written notice to the Owners of Accession. Such notice shall identify the rating borne by the Series 2012 Senior Bonds and the Series 2012 Subordinate Bonds upon Accession. Such notice shall advise the Owners of the Series 2012 Subordinate Bonds to surrender their Series 2012 Subordinate Bonds to the Trustee in exchange for new Series 2012 Subordinate Bonds, which new Series 2012 Subordinate Bonds shall be in substantially the form of the surrendered Series 2012 Subordinate Bonds, except that (i) they shall be modified as appropriate to indicate that they are on complete parity with the Series 2012 Senior Bonds as to lien upon the Series 2012 Trust Estate; and (ii) they shall bear new CUSIP numbers. The District also shall file or cause to be filed a copy of such notice with the MSRB.

In connection with the potential Accession, the District shall cooperate with the Holder or Holders of the Series 2012 Subordinate Bonds in the process of obtaining a rating on and new CUSIP numbers for the Series 2012 Subordinate Bonds, but the fees and costs attributable to obtaining such rating on and CUSIP numbers for the Series 2012 Subordinate Bonds shall be borne by the Holder or Holders of the Series 2012 Subordinate Bonds.

Limitations on Rights and Remedies of Owners of Series 2012 Subordinate Bonds

Pursuant to the Supplemental Indenture, so long as the Series 2012 Senior Bonds are Outstanding, the Owners of the Series 2012 Subordinate Bonds shall have a subordinate and inferior lien to the lien on the Series 2011 Trust Estate, subject to the first and prior lien thereon in favor of the Owners of the Series 2012 Senior Bonds. The Owners of the Series 2012 Subordinate Bonds shall have no rights whatsoever to direct or control remedies upon the occurrence and continuance of any default or Event of Default, nor shall the Owners of the Series 2012 Subordinate Bonds have any right to sit on or participate in any Bondholder or similar committee, nor shall such Owners have the right to vote nor be counted as Owners for the purpose of the exercise of remedial provisions of the

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Indenture or for the purpose of consents to any amendments of the Indenture, except for amendments which would affect the rights of such Owners of the Series 2012 Subordinate Bonds. Owners of the Series 2012 Subordinate Bonds shall, however, have the right, and shall be limited to the right, to enforce the provisions of the Indenture as it relates to the deposit and disposition of amounts on deposit or to be deposited into the Funds and Accounts held for the benefit of the Owners of the Series 2012 Subordinate Bonds and may enforce such rights by mandamus, injunction or other equitable remedies. The Trustee shall have no fiduciary duty to the Owners of the Series 2012 Subordinate Bonds except to enforce the provisions of the Indenture as it relates to the deposit and disposition of amounts on deposit or to be deposited into the Funds and Accounts held for the benefit of the Owners of the Series 2012 Subordinate Bonds.

Enforcement and Collection of Series 2012 Assessments

The primary sources of payment for the Series 2012 Bonds are the Series 2012 Assessments imposed on each landowner within the District which are specially benefited by the 2000A Project. To the extent that landowners fail to pay such Series 2012 Assessments, delay payments, or are unable to pay Series 2012 Assessments, the successful pursuit of collection procedures available to the District is essential to continued payment of principal of and interest on the Series 2012 Bonds. The Act provides for various methods of collection of delinquent taxes by reference to other provisions of the Florida Statutes. See "THE SERIES 2012 ASSESSMENTS" herein for a summary of Series 2012 Assessment payment and collection procedures appearing in the Florida Statutes.

The District has covenanted in the Indenture to assess, levy, collect or cause to be collected and enforce the payment of Series 2012 Assessments in the manner prescribed by the Indenture and all resolutions, ordinances or laws thereunto appertaining and pay or cause to be paid to the Trustee the proceeds of Series 2012 Assessments, as received. Special Assessments levied on platted lots and pledged to secure the Series 2012 Bonds are required by the Indenture to be collected pursuant to the uniform method for the collection of special assessments set forth in the Act (the “Uniform Method”), and Special Assessments levied on unplatted lots and pledged to secure the Series 2012 Bonds shall be collected directly by the District pursuant to the Act and Chapters 170 and 197, Florida Statutes, and not pursuant to the Uniform Method, in each case unless otherwise directed by the Trustee acting at the direction of the Holders of a majority in aggregate principal amount of the Series 2012A-1 Bonds and, after Accession has occurred, the Holders of a majority in combined aggregate principal amount of the Series 2012 Bonds. All Special Assessments that are collected directly by the Issuer and not via the Uniform Method shall be due and payable by the landowner no later than thirty (30) days prior to each Interest Payment Date.

The District has also covenanted and agreed that upon the occurrence and continuance of an Event of Default, it will take such actions to enforce the remedial provisions of the Indenture, the provisions for the collection of delinquent Special Assessments, the provisions for the foreclosure of liens of delinquent Special Assessments and will take such other appropriate remedial actions as shall be directed by the Trustee acting at the direction of, and on behalf of, the Owners of a majority in principal amount, from time to time, of the Series 2012A-1 Bonds, and, after Accession shall have occurred, of the Series 2012 Bonds. The District further covenants and agrees that so long as any Series 2012A-2 Bonds are Outstanding, it will not reduce the Special Assessment on any tax parcel from that set forth in the Methodology Report (hereinafter defined) on account of any reduction in Debt Service on the Series 2012 Bonds resulting from a redemption of Series 2012A-2 Bonds from excess moneys in the Series 2012 Revenue Account.

If the owner of any lot or parcel of land assessed for a particular Project shall be delinquent in the payment of any Special Assessment, then such Special Assessment shall be enforced pursuant to the provisions of Chapter 197, Florida Statutes, or any successor statute thereto, including but not limited to the sale of tax certificates and tax deeds as regards such delinquent Special Assessment.

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In the event the provisions of Chapter 197, Florida Statutes, and any provisions of the Act with respect to such sale are inapplicable by operation of law, then upon the delinquency of any Special Assessment the District shall, to the extent permitted by law, utilize any other method of enforcement as provided in the Master Indenture, including, without limitation, declaring the entire unpaid balance of such Special Assessment to be in default and, at its own expense, cause such delinquent property to be foreclosed, pursuant to the provisions of Section 170.10, Florida Statutes, in the same method now or hereafter provided by law for the foreclosure of mortgages on real estate, or pursuant to the provisions of Chapter 173, Florida Statutes, and Sections 190.026 and 170.10, Florida Statutes, or otherwise as provided by law.

If the Special Assessments levied and collected under the Uniform Method are delinquent, then the applicable procedures for issuance and sale of tax certificates and tax deeds for nonpayment shall be followed in accordance with Chapter 197, Florida Statutes and related statutes. The Indenture provides that if any property shall be offered for sale for the nonpayment of any Series 2012 Assessment and no person or persons shall purchase such property for an amount equal to the full amount due on the Special Assessments (principal, interest, penalties and costs, plus attorneys’ fees, if any), the property may then be purchased by the District for an amount equal to the balance due on the Special Assessments (principal, interest, penalties and costs, plus attorneys’ fees, if any), from any legally available funds of the District and the District shall receive the property in its corporate name or in the name of a special purpose entity title to the property for the benefit of the Owners of the Series 2012 Bonds; provided that the Trustee shall have the right, acting at the direction of the Owners of a majority in aggregate principal amount, from time to time, of the Series 2012A-1 Bonds and, after Accession shall have occurred, of the Series 2012 Bonds, but shall not be obligated, to direct the District with respect to any action taken pursuant to this provision. The District, either through its own action, or actions caused to be taken through the Trustee, shall have the power and shall lease or sell such property, and deposit all of the net proceeds of any such lease or sale into the Series 2012 Revenue Account. The District, either through its own actions, or actions caused to be taken through the Trustee, agrees that it shall, after being provided with assurances satisfactory to it of payment of its fees, costs and expenses for doing so, be required to take the measures provided by law for sale of property acquired by it as trustee for the Owners of the Series 2012 Bonds within thirty (30) days after the receipt of the request therefore signed by the Trustee or the Owners of a majority in aggregate principal amount, from time to time, of the Series 2012A-1 Bonds and, after Accession shall have occurred, of the Series 2012 Bonds. The Trustee may, upon direction from the Owners of a majority in aggregate principal amount of the Series 2012A-1 Bonds, and after Accession, of the Series 2012 Bonds, pay costs associated with any actions taken by District pursuant to this paragraph from any moneys legally available for such purpose held under the Indenture.

THERE CAN BE NO ASSURANCE THAT ANY SALE, PARTICULARLY A BULK SALE, OF LAND SUBJECT TO DELINQUENT ASSESSMENTS WILL PRODUCE PROCEEDS SUFFICIENT TO PAY THE FULL AMOUNT OF SUCH DELINQUENT ASSESSMENTS PLUS OTHER DELINQUENT TAXES AND ASSESSMENTS APPLICABLE THERETO.

Prepayment

Pursuant to the terms of applicable state law, any owner of property subject to the Series 2012 Assessments may, at its option, require the District to release and extinguish the lien upon its property by virtue of the levy of the Series 2012 Assessments that relate to the Series 2012 Bonds by paying to the District the entire amount of such Series 2012 Assessment on such property, plus accrued interest to the next succeeding Interest Payment Date (or the second succeeding Interest Payment Date if such prepayment is made within forty calendar days before an Interest Payment Date), attributable to the property subject to Series 2012 Assessment owned by such owner. Upon receipt of a prepayment as described in the preceding sentence, the District shall immediately pay

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the amount so received to the Trustee, and the District shall take such action as is necessary to record in the official records of the County an affidavit or affidavits, as the case may be, executed by an authorized officer of the District, to the effect that the Series 2012 Assessment has been paid and that such Series 2012 Assessment lien is thereby released and extinguished. Upon receipt of any such moneys from the District, the Trustee shall immediately deposit the same into the Series 2012 Bond Redemption Fund, such funds are to be applied to the redemption of Series 2012 Bonds in accordance with the terms of the Indenture. See "DESCRIPTION OF THE SERIES 2012 BONDS -- Redemption Provisions" herein.

Re-Assessment

Pursuant to the Indenture, if any Special Assessment shall be either in whole or in part annulled, vacated or set aside by the judgment of any court, or if the District shall be satisfied that any such Special Assessment is so irregular or defective that the same cannot be enforced or collected, or if the District shall have omitted to make such Special Assessment when it might have done so, the District shall either (i) take all necessary steps to cause a new Special Assessment to be made for the whole or any part of said improvement or against any property benefitted by said improvement, or (ii) in its sole discretion, make up the amount of such Special Assessment from legally available moneys, which moneys shall be deposited into the applicable Series Account in the Revenue Fund. In case such second Special Assessment shall be annulled, the District shall obtain and make other Special Assessments until a valid Special Assessment shall be made.

Structure of Series 2012 Assessments

The Series 2012 Assessments are payable in substantially equal annual installments of principal and interest. According to the District's Assessment Proceedings, a property owner may prepay the Series 2012 Assessment, in whole, at any time or any portion of the remaining balance of the Assessments one (1) time if there is also paid in addition to the remaining principal balance of the Assessment an amount equal to the interest that would otherwise be due on such balance on the next succeeding Interest Payment Date for the Series 2012 Bonds, or, if prepaid during the forty five day period preceding the Interest Payment Date, to the next succeeding Interest Payment Date.

Additional Covenant of the District Regarding Special Assessments

In addition to, and not in limitation of, the covenants contained elsewhere in the Second Supplemental Indenture and in the Master Indenture, the District covenants to comply with the terms of the proceedings heretofore adopted with respect to the Special Assessments, including the Report, and to levy the Special Assessments and any required true-up payments set forth in the Report in such manner as will generate funds sufficient to pay the principal of and interest on the Series 2012 Bonds, when due. The Report shall not be amended in a manner that will or is likely to have a material adverse effect on the interests of the holders of the Series 2012 Senior Bonds without the written consent of the Holders of a majority in aggregate principal amount of the Series 2012 Senior Bonds. The Report shall not be amended in a manner that will or is likely to have a material adverse effect on the interests of the holders of the Series 2012 Subordinate Bonds with the written consent of the Holders of a majority in aggregate principal amount of the Series 2012 Subordinate Bonds.

Additional Events of Default and Remedies With Respect to Series 2012 Bonds

The Supplemental Indenture amends the Master Indenture with respect to the Series 2012 Bonds by inserting at the conclusion of the provision therein relating to “Events of Default” following paragraphs (the quoted language includes adjustments to defined terms to conform to defined terms used herein):

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“(g) Prior to Accession, any portion of the Special Assessments shall have become delinquent Assessments and the terms of the Indenture require the Trustee to withdraw funds from the Series 2012A-1 Debt Service Reserve Account or the Series 2012A-2 Debt Service Reserve Account to pay debt service on the Series 2012A-1 Bonds (regardless of whether the Trustee does or does not, per the direction of the Holders of a majority in aggregate principal amount of the Series 2012A-1 Bonds, actually withdraw such funds from the Series 2012A-1 Debt Service Reserve Account or the Series 2012A-2 Debt Service Reserve Account to pay debt service on the Series 2012A-1 Bonds); and

(h) After Accession shall have occurred, any portion of the Special Assessments shall have become delinquent Assessments and the terms of the Indenture require the Trustee to withdraw funds from the Series 2012A-1 Debt Service Reserve Account and the Series 2012A-2 Debt Service Reserve Account to pay debt service on the Series 2012A-1 Bonds and the Series 2012A-2 Bonds, respectively (regardless of whether the Trustee does or does not, per the direction of the Holders of a majority in aggregate principal amount of the Series 2012A Bonds, actually withdraw such funds from the Series 2012A-1 Debt Service Reserve Account and the Series 2012A-2 Debt Service Reserve Account to pay debt service on the Series 2012A-1 Bonds and the Series 2012A-2 Bonds, respectively).”

The Master Indenture is further amended to include the following paragraph (the quoted language includes adjustments to defined terms to conform to defined terms used herein):

“The District covenants and agrees that, upon the occurrence and continuance of an Event of Default, it will take such actions to enforce the remedial provisions of the Indenture, the provisions for the collection of delinquent Special Assessments, including delinquent Direct Billed Operation and Maintenance Assessments, the provisions for the foreclosure of liens of delinquent Assessments, and will take such other appropriate remedial actions as shall be directed by the Trustee acting at the direction of, and on behalf of, the Holders of a majority in aggregate principal amount, from time to time, of the Series 2012 Senior Bonds and, after Accession shall have occurred, of the Series 2012 Bonds. Notwithstanding anything to the contrary herein, and unless otherwise directed by the Holders of a majority in aggregate principal amount, from time to time, of the Series 2012 Senior Bonds and, after Accession shall have occurred, of the Series 2012 Bonds, and allowed pursuant to Federal or State law, the District acknowledges and agrees that (i) upon failure of any property owner to pay Special Assessments collected directly by the District when due, that the entire Special Assessments, with interest and penalties thereon, shall immediately become due and payable and the District shall promptly, but in any event within ninety (90) days, cause to be brought the necessary legal proceedings from the foreclosure of liens of delinquent Special Assessments, including interest and penalties and (ii) the foreclosure proceedings shall be prosecuted to a sale and conveyance of the property involved in said proceedings as now provided by law in suits to foreclose mortgages.”

Provision of Supplemental Indenture Relating to Bankruptcy or Insolvency of Landowner

The following provision contained in the Supplemental Indenture is stated to apply both before and after the commencement, whether voluntary or involuntary, or any case, proceeding or other action by or against any owner of any tax parcel subject to the Special Assessments (an “Insolvent Taxpayer”) under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization, assignment for the benefit of creditors, or relief of debtors (a “Proceeding”), except where such tax parcel shall be homestead property. For as long as any Series 2012 Bonds remain outstanding, in any Proceeding involving the District, any Insolvent Taxpayer, the Series 2012 Bonds or the Special Assessments, the District shall be obligated to act in accordance with direction from the Trustee with regard to all matters directly or indirectly affecting the Series 2012 Bonds or for as long as any of the Series 2012 Bonds remain Outstanding. The District agrees

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that it shall not be a defense to a breach of the foregoing covenant that it has acted upon advice of counsel in not complying with this covenant.

The District acknowledges and agrees in the Supplemental Indenture that, although the Series 2012 Bonds were issued by the District, the Holders of the Series 2012 Bonds are categorically the party with a financial stake in the transaction and, consequently, the party with a vested interest in a Proceeding. In the event of any Proceeding involving any Insolvent Taxpayer:

(a) the District thereby agrees that it shall not make any election, give any consent, commence any action or file any motion, claim, obligation, notice or application or take any other action or position in any Proceeding or in any action related to a Proceeding that affects, either directly or indirectly, the Special Assessments, the Series 2012 Bonds or any rights of the Trustee under the Indenture that is inconsistent with any direction from the Trustee;

(b) the Trustee shall have the right, but is not obligated to, vote in any such Proceeding any and all claims of the District, and, if the Trustee chooses to exercise such right, the District shall be deemed to have appointed the Trustee as its agent and granted to the Trustee an irrevocable power of attorney coupled with an interest, and its proxy, for the purpose of exercising any and all rights and taking any and all actions available to the District in connection with any Proceeding of any Insolvent Taxpayer, including without limitation, the right to file and/or prosecute any claims, to vote to accept or reject a plan, and to make any election under Section 1111(b) of the United States Bankruptcy Code; and

(c) the District shall not challenge the validity or amount of any claim submitted in such Proceeding by the Trustee in good faith or any valuations of the lands owned by any Insolvent Taxpayer submitted by the Trustee in good faith in such Proceeding or take any other action in such Proceeding, which is adverse to the Trustee’s enforcement of the District claim with respect to the Special Assessments or receipt of adequate protection (as that term is defined in the United States Bankruptcy Code).

Without limiting the generality of the foregoing, the District agrees in the Supplemental Indenture that the Trustee shall have the right (i) to file a proof of claim with respect to the Special Assessments and the Completion Agreement, (ii) to deliver to the District a copy thereof, together with evidence of the filing with the appropriate court or other authority, and (iii) to defend any objection filed to said proof of claim. Nothing in the Supplemental Indenture shall preclude the District from becoming a party to a Proceeding in order to enforce a claim for operation and maintenance assessments, and the District shall be free to pursue such a claim in such manner as it shall deem appropriate in its sole and absolute discretion.

Critical Personnel

The District covenants and agrees in the Supplemental Indenture for the benefit of the Holders from time to time of the Series 2012 Bonds, that, except upon a finding by the Board of Supervisors of the District of gross negligence, malfeasance or misfeasance, it will not without the consent of the Holders of a majority in aggregate principal amount, from time to time, of the Series 2012 Senior Bonds and, after Accession shall have occurred, of the Series 2012 Bonds, remove or replace District counsel, the District manager, the tax roll or methodology consultant, or the Trustee.

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ENFORCEMENT OF ASSESSMENT COLLECTIONS

General

The primary sources of payment for the Series 2012 Bonds are the Series 2012 Assessments levied and imposed on benefitted parcels in the Development specially benefitted by the refinancing of the Original Project or portions thereof pursuant to the assessment proceedings adopted by the District (the “Assessment Proceedings”). The determination, order, levy, and collection of Series 2012 Assessments must be done in compliance with procedural requirements and guidelines provided by State law. Failure by the District to comply with such requirements could result in delay in the collection of, or the complete inability to collect Series 2012 Assessments, during any year. Such delays in the collection of Series 2012 Assessments, or complete inability to collect Series 2012 Assessments, would have a material adverse effect on the ability of the District to make full or punctual payment of debt service requirements on the Series 2012 Bonds. To the extent that landowners fail to pay the Series 2012 Assessments, delay payments, or are unable to pay the same, the successful pursuance of collection procedures available to the District is essential to continued payment of principal of and interest on the Series 2012 Bonds. The Act provides for various methods of collection of delinquent Series 2012 Assessments by reference to other provisions of the Florida Statutes. The following is a description of certain statutory provisions of assessment payment and collection procedures appearing in the Florida Statutes, but is qualified in its entirety by reference to such statutes. Alternative Uniform Tax Collection Procedure for Series 2012 Assessments

The Florida Statutes provide that, subject to certain conditions, non-ad valorem special assessments may be collected by using the Uniform Method. The Uniform Method of collection is available only in the event the District complies with statutory and regulatory requirements and enters into agreements with the Tax Collector and Property Appraiser providing for the Series 2012 Assessments to be levied and then collected in this manner. The District has covenanted in the Indenture to use its best efforts to collect the Series 2012 Assessments using the Uniform Method of collection on platted property. Under the Uniform Method, the Series 2012 Assessments will be collected together with county and other ad valorem taxes and will appear on the tax bill (also referred to as a “tax notice”) issued to each landowner in the District. The statutes relating to enforcement of ad valorem taxes provide that ad valorem taxes become due and payable on November 1 of the year when assessed or as soon thereafter as the certified tax roll is received by the Tax Collector and constitute a lien upon the land from February 1 of such year until paid or barred by operation of law. Such taxes (together with any assessments, including the Series 2012 Assessments, being collected by the Uniform Method) are to be billed, and landowners in the District are required to pay all such taxes and assessments, without preference in payment of any particular increment of the tax bill, such as the increment owing for the Series 2012 Assessments. Upon receipt of moneys by the Tax Collector from the Series 2012 Assessments, such moneys will be delivered to the District, which will remit such Series 2012 Assessments to the Trustee for deposit to the applicable accounts and subaccounts established for the Series 2012 Bonds in the Revenue Fund created under the Indenture and applied in accordance therewith.

All County, school and special district ad valorem taxes, non-ad valorem special assessments and voter-approved ad valorem taxes levied to pay principal of and interest on bonds, including the Series 2012 Assessments levied by the District, are payable at one time. If a taxpayer does not make complete payment of the total amount, he or she cannot designate specific line items on his or her tax bill as deemed paid in full. Such partial payment is not to be accepted and any partial payment is to be returned to the taxpayer. Therefore, in the event the Series 2012 Assessments are collected pursuant to the Uniform Method, any failure to pay any one line item, whether it be the Series 2012 Assessments or not, would cause the Series 2012 Assessments to not be collected to that extent on

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that parcel of property whose owner does not pay this bill in full, which could have a significant adverse effect on the ability of the District to make full or punctual payment of debt service requirements on the Series 2012 Bonds.

Under the Uniform Method, if the Series 2012 Assessments are paid during November when due or during the following three months, the taxpayer is granted a variable discount equal to 4% in November (or at any time within 30 days after the original tax notice is mailed) and decreasing one percentage point per month to 1% in February. All unpaid taxes and assessments, including the Series 2012 Assessments collected pursuant to the Uniform Method, become delinquent on April 1 of the year following assessment, and the Tax Collector is required to collect the ad valorem taxes and non-ad valorem special assessments on the tax bill prior to April 1 and after that date to institute statutory procedures upon delinquency to collect such taxes and assessments through the sale of “tax certificates,” as discussed below. Delay in the mailing of tax notices to taxpayers may result in a delay throughout this process.

Collection of delinquent Series 2012 Assessments under the Uniform Method is, in essence, based upon the sale by the Tax Collector of “tax certificates” and remittance of the proceeds of such sale to the District for payment of the Series 2012 Assessments due. In the event of a delinquency in the payment of taxes and assessments on real property, the landowner may, prior to the sale of tax certificates, pay the total amount of delinquent ad valorem taxes and non-ad valorem assessments plus the applicable interest charge, costs and advertising charges on the amount of such delinquent taxes and assessments. If the landowner does not act, the Tax Collector is required to attempt to sell tax certificates on such property to the person who pays the delinquent taxes and assessments owing and interest thereon and certain costs, and who accepts the lowest interest rate per annum to be borne by the certificates (but not more than 18%). Tax certificates are sold by public bid. If there are no bidders, the tax certificate is issued to Polk County (the “County”), as the county in which the assessed lands are located. The County is to hold, but not pay for, the tax certificate with respect to the property, bearing interest at the maximum legal rate of interest (currently 18%). The Tax Collector does not collect any money if tax certificates are “struck off” (issued) to the County. The County may sell such certificates to the public at any time at the principal amount thereof plus interest at the rate of not more than 18% per annum and a fee. Proceeds from the sale of tax certificates are required to be used to pay taxes and assessments (including the Series 2012 Assessments), interest, costs and charges on the real property described in the certificate. The demand for such certificates is dependent upon various factors, which include the rate of interest that can be earned by ownership of such certificates and the underlying value of the land that is the subject of such certificates and which may be subject to sale at the demand of the certificate holder. Therefore, the underlying market value of the property within the District may affect the demand for certificates and the successful collection of the Series 2012 Assessments, which are the primary source of payment of the Series 2012 Bonds.

Any tax certificate in the hands of a person other than the County may be redeemed and canceled, in whole or in part, by the person owning or claiming an interest in the underlying land, or a creditor thereof, at any time before a tax deed is issued or the property is placed on the list of lands available for sale, at a price equal to the face amount of the certificate or portion thereof together with all interest, costs, charges and omitted taxes due. Regardless of the interest rate actually borne by the certificates, persons redeeming tax certificates must pay a minimum interest rate of 5%, unless the rate borne by the certificates is zero percent. The proceeds of such a redemption are paid to the Tax Collector who transmits to the holder of the tax certificate such proceeds less service charges, and the certificate is canceled. Redemption of tax certificates held by the County is effected by purchase of such certificates from the County, as described in the preceding paragraph.

Any holder, other than the County, of a tax certificate that has not been redeemed has seven years from the date of delinquency during which to act against the land that is the subject of the tax

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certificate. After an initial period ending two years from April 1 of the year of issuance of a certificate, during which period actions against the land are held in abeyance to allow for sales and redemptions of tax certificates, and before the expiration of seven years from the date of issuance, the holder of a certificate may apply for a tax deed to the subject land. The applicant is required to pay to the Tax Collector at the time of application all amounts required to redeem or purchase all outstanding tax certificates covering the land, plus interest, any omitted taxes or delinquent taxes and interest, and current taxes, if due. If the County holds a tax certificate on property valued at $5,000 or more and has not succeeded in selling it, the County must apply for a tax deed two years after April 1 of the year of issuance. The County pays costs and fees to the Tax Collector but not any amount to redeem any other outstanding certificates covering the land. Thereafter, the property is advertised for public sale.

In any such public sale conducted by the Clerk of the Circuit Court, the private holder of the tax certificate who is seeking a tax deed for non-homestead property is deemed to submit a minimum bid equal to the amount required to redeem the tax certificate, charges for the cost of sale, redemption of other tax certificates on the land, and the amount paid by such holder in applying for the tax deed, plus interest thereon. In the case of homestead property, the minimum bid is also deemed to include, in addition to the amount of money required for the minimum bid on non-homestead property, an amount equal to one-half of the latest assessed value of the homestead. If there are no higher bids, the holder receives title to the land, and the amounts paid for the certificate and in applying for a tax deed are credited toward the purchase price. If there are other bids, the holder may enter the bidding. The highest bidder is awarded title to the land. The portion of proceeds of such sale needed to redeem the tax certificate, and all other amounts paid by such person in applying for a tax deed, are forwarded to the holder thereof or credited to such holder if such holder is the successful bidder. Excess proceeds are distributed first to satisfy governmental liens against the land and then to the former title holder of the property (less service charges), lienholder of record, mortgagees of record, vendees of recorded contracts for deeds, and other lienholder and any other person to whom the land was last assessed on the tax roll for the year in which the land was assessed, all as their interest may appear.

Except for certain governmental liens and certain restrictive covenants and restrictions, no right, interest, restriction or other covenant survives the issuance of a tax deed. Thus, for example, outstanding mortgages on property subject to a tax deed would be extinguished.

On County-held certificates for which there are no bidders at the public sale, the County may at any time within ninety (90) days from the date the land is placed on the lists of lands available for taxes, purchase the land without further notice or advertising for a statutorily prescribed opening bid. After ninety (90) days have passed, any person or governmental unit may purchase the land by paying the amount of the opening bid. Ad valorem taxes and non- ad valorem assessments accruing after the date of public sale do not require repetition of the bidding process but are added to the minimum bid. Three years from the date the land was offered for public sale, unsold lands escheat to the County and all tax certificates, taxes and liens against the property are canceled and a deed is executed vesting title in the County Commission.

Pursuant to the Indenture, if any property is offered for sale for the nonpayment of any Series 2012 Assessments, and no person purchases the same for an amount at least equal to the full amount due on the Series 2012 Assessments, the District may purchase the property for an amount equal to the balance due on the Series 2012 Assessments (principal, interest, penalties and costs, plus attorneys’ fees, if any) from any legally available funds of the District. The District will thereupon receive title to the subject property for the benefit of the Owners of the Series 2012 Bonds and, either through its own actions or the actions of the Trustee, may lease or sell such property and deposit all of the net proceeds of any such sale or lease into the applicable Accounts and subaccounts created for the Series 2012 Bonds in the Revenue Fund created under the Indenture and applied in

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accordance therewith. It should be noted that it is unlikely the District will ever have sufficient funds to complete a significant number of purchases of property offered for sale for the nonpayment of Series 2012 Assessments. Foreclosure

In the event the Uniform Method of collection is not available to the District, the District may, itself, directly levy and enforce the collection of the Series 2012 Assessments pursuant to Chapters 170 and 190 and Section 197.3631, Florida Statutes. Section 170.10, Florida Statutes provides that upon the failure of any property owner to pay all or any part of the principal of a special assessment or the interest thereon, when due, the governing body of the entity levying the assessment is authorized to commence legal proceedings for the enforcement of the payment thereof, including commencement of an action in chancery, commencement of a foreclosure proceeding in the same manner as the foreclosure of a real estate mortgage, or commencement of an action under Chapter 173, Florida Statutes, relating to foreclosure of municipal tax and special assessment liens. Any foreclosure proceedings to enforce payment of the Series 2012 Assessments may proceed under the provisions of Chapter 173, Florida Statutes, which provides that after the expiration of one year from the date any special assessment or installment thereof becomes due, the District may commence a foreclosure proceeding against the lands upon which the assessments are liens. Such a proceeding is in rem, meaning that it is brought against the land and not against the owner.

Provision of Supplemental Indenture Regarding Foreclosing of Special Assessment Lien

The Supplemental Indenture provides that, if any property shall be offered for sale for the nonpayment of any Series 2012 Assessment and no person or persons shall purchase such property for an amount equal to the full amount due on the Special Assessments (principal, interest, penalties and costs, plus attorneys’ fees, if any), the property may then be purchased by the District for an amount equal to the balance due on the Special Assessments (principal, interest, penalties and costs, plus attorneys’ fees, if any), from any legally available funds of the District and the District shall receive the property in its corporate name or in the name of a special purpose entity title to the property for the benefit of the Owners of the Series 2012 Bonds; provided that the Trustee shall have the right, acting at the direction of the Owners of a majority in aggregate principal amount, from time to time, of the Series 2012 Senior Bonds and, after Accession shall have occurred, of the Series 2012 Bonds, but shall not be obligated, to direct the District with respect to any action taken pursuant to this provision. The District, either through its own action, or actions caused to be taken through the Trustee, shall have the power and shall lease or sell such property, and deposit all of the net proceeds of any such lease or sale into the Series 2012 Revenue Account. The District, either through its own actions, or actions caused to be taken through the Trustee, agrees that it shall, after being provided with assurances satisfactory to it of payment of its fees, costs and expenses for doing so, be required to take the measures provided by law for sale of property acquired by it as trustee for the Owners of the Series 2012 Bonds within thirty (30) days after the receipt of the request therefore signed by the Trustee or the Owners of a majority in aggregate principal amount, from time to time, of the Series 2012 Senior Bonds and, after Accession shall have occurred, of the Series 2012 Bonds. The Trustee may, upon direction from the Owners of a majority in aggregate principal amount of the Series 2012 Senior Bonds, and after Accession, of the Series 2012 Bonds, pay costs associated with any actions taken by District pursuant to this paragraph from any moneys legally available for such purpose held under the Indenture.

Projected Assessment Levels and Value to Lien Ratios upon Issuance of Series 2012 Bonds

The estimated annual assessments by product type for the proposed Series 2012 Bonds are depicted in the table below:

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Series 2012 Maximum Annual Assessments

Product Type Assessable

Units

Current Assessment

Rate Per Unit

Annual Assessment

Rate Per Unit After Refunding

Reduction in Annual

Assessments by Product

Type Single Family 3,058 $546.00 $438.05 $107.95

Multi-family 1,084 $546.00 $438.05 $107.95

Non-residential 72 $546.00 $438.05 $107.95

Totals 4,214

In addition to annual debt service assessments, all landowners within the District also pay property taxes levied by the County, operation and maintenance fees levied by the District and a homeowner’s association fee. The millage rate for the area where the Development is located is 15.6056 mills. The District’s operation and maintenance fee for the fiscal year 2012 budget is $151.17 per residential unit. Non-residential property pays $151.17 per ERU (equivalent residential unit).

Based on an average assessed value per single family unit located in the Development of

$135,040 and the projected Series 2012 Bonds principal allocation per single family unit of $5,051.02, the estimated value-to-lien ratio for single family homes is approximately 27 to 1 as depicted in the table below.

Value to Lien Ratios-Proposed Series 2012 Bonds

Product Type

Total Assessable

Units by Type

Allocation of

Proposed Series 2012

Debt

Total Assessed Value by

Type (2011)

Average AV Per

Unit (2011)

Projected Series 2012 Principal Allocation Per Unit

Projected Value-to-

Lien Ratio Platted Residential 2,745 $13,865,051 $383,513,587 $135,040 $5,051.02 26.74

Future Residential 1,397 $7,056,276 $694,640 $497 $5,051.02 0.10

Non-residential 72 $ 363,673 $ 8,772,800 $121,844 $5,051.02 24.13

Totals 4,214 $21,285,000 $392,981,027 18.47

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Tax Levies and Collections

The following table summarizes real property taxes levied and collected for the County for

the last ten (10) fiscal years.

Polk County, Florida Property Tax Levies and Collections

Last Ten Fiscal Years

Collected within the Fiscal Year Total Collections of the Levy To Date

FiscalYear

Total Tax Levy for

Fiscal Year (2)

Adjustments

Total

Adjusted Levy

Amount (1)

Percentage of Levy

Collections in Subsequent

Years

Amount Percentageof Adjusted

Levy 2000 $116,092,679 $3,701,209 $119,793,888 $110,202,216 94.93% $1,016,034 $ 111,218,250 92.84% 2001 119,949,552 3,725,595 123,675,147 113,760,786 94.84% 1,379,019 115,139,805 93.10% 2002 130,227,363 4,002,199 134,229,562 124,009,730 95.23% 1,924,697 125,934,427 93.82%2003 139,254,319 4,188,761 143,443,080 132,381,113 95.06% 2,314,270 134,695,383 93.90%2004 147,082,178 4,549,685 151,631,863 140,882,758 95.79% 2,584,413 143,467,171 94.62%2005 161,690,703 5,220,054 166,910,757 153,321,359 94.82% 1,190,701 154,512,060 92.57%2006 207,717,380 6,868,142 214,585,522 199,981,390 96.28% 1,131,082 201,112,472 93.72%2007 252,650,981 8,110,624 260,761,605 243,398,272 96.34% 840,398 244,238,670 93.66%2008 244,795,490 7,719,596 252,515,086 234,276,092 95.70% 2,097,260 236,373,352 93.61%2009 236,717,691 7,339,158 244,056,849 226,754,272 95.79% 2,141,104 228,895,376 93.79%2010 208,673,287 6,651,269 215,324,556 201,588,617 96.60% 1,379,366 202,967,983 94.26%

(1) Current and delinquent collections include penalties.

(2) Property taxes become due and payable on November 1 of each year. A four percent discount is allowed if the taxes are paid in November with the discount declining by one percent each month thereafter. Accordingly, taxes collected will never be 100% of the tax levy. Taxes become delinquent on April 1 of each year and tax certificates for the full amount of any unpaid taxes and assessments must be sold not later than June 1 of each year.

Source: Polk County, Florida Comprehensive Annual Financial Report, Fiscal Year 2010.

Neither the District nor the Underwriter has independently investigated or verified the property data in the table above and neither assumes responsibility for the accuracy or completeness of the information contained therein. The summary of real property taxes was obtained by the Underwriter from the Polk County, Florida, Comprehensive Annual Financial Report, September 30, 2010.

Neither the District nor the Underwriter can give any assurance to the holders of the Series 2012 Bonds (1) that the past experience of the County with regard to tax and special assessment delinquencies as shown above is applicable in any way to the Series 2012 Assessments, (2) that future landowners and taxpayers in the District will pay such Series 2012 Assessments, (3) that a market may exist in the future for the aforementioned tax certificates in the event of sale of such certificates for taxable units within the District, and (4) that eventual sale of tax certificates for real property within the District, if any, will be for an amount sufficient to pay amounts due under the Indenture to discharge the lien of Series 2012 Assessments and all other liens that are coequal therewith.

There have been no draws on the Series 2000A Debt Service Reserve Account (“DSRF”) since the issuance of the Series 2000A Bonds. The current balance in the Series 2000A DSRF is

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$2,163,176.17. According to Polk County records, $8,736 in tax certificates sold in the District for fiscal year 2010-11, which corresponds to less than 1% of the total debt service amount assessed on the tax roll for the Series 2000A Bonds that are currently Outstanding.

The following table below depicts levy and collection history for the District.

HISTORICAL LEVY AND COLLECTION HISTORY FOR THE DISTRICT

DELINQUENT ASSESSMENTS AND TAX CERTIFICATE SALES1

(DEBT SERVICE ONLY)

Fiscal Year

Total Assessments

Levied 2 Delinquent

Assessments Tax Certificates

Sold

Tax Certificates Remaining to be

Sold

% of Tax Certs Sold to Amount

Assessed

2010-11 $1,501,500 $21,840 $8,736 $0 0.58%

2009-10 $1,504,230 $20,202 $12,558 $7,644 0.83%

2008-09 $1,510,236 $33,306 $17,472 $546 1.16%

2007-08 $1,396,122 $16,926 $15,288 $0 1.10%

1 Assessment information provided by District Manager’s office. Tax certificate information provided by County Tax Collector's office.

2 Reflects Assessments levied on Tax Roll only.

ASSESSMENT LEVY AND COLLECTION HISTORY

Fiscal Year Net Amount

Levied1 Net Amount

Collected

2010-11 $2,156,323

2009-10 $2,158,889 $2,165,332

2008-09 $2,164,535 $2,170,209

2007-08 $2,171,016 $2,190,110

1 Both on Tax Roll and collected directly by the District. Assessment information provided by District Manager’s office.

The ten largest Assessment payers in the District for Fiscal year 2011-2012 are depicted in

the table below:

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Property Owner Units Product-

Type

Special Assessment

Rates

Total Annual Special

Assessments (Debt

Service)

% of Total Annual Series 2000A

Assessments

AVATAR PROPERTIES INC 107 Single Family $546.00 $58,422 2.60%

AVATAR PROPERTIES INC-Off Roll 1,467

Future Resid &

Commercial $507.78 $744,913 33.19%

HUGHES WAYNE P 5 Single Family $546.00 $2,730 0.12%

MILLER GARY 4 Single Family $546.00 $2,184 0.10%

CARR MELVIN W 3 Single Family $546.00 $1,638 0.07%

MATHEWS TRUST 3 Single Family $546.00 $1,638 0.07%

DAVIES RICHARD 4 Single Family $546.00 $2,184 0.10%

MONTENEGRO MARY 3 Single Family $546.00 $1,638 0.07%

WALSH DONALD E 3 Single Family $546.00 $1,638 0.07%

BANKS ROBERT 2 Single Family $546.00 $1,092 0.05%

BETTENDORF ROBERT F TRUST 2

Single Family $546.00 $1,092 0.05%

Top Ten Assessment Payers 1603 $546.00 $819,169 36.50% All Other Assessment Payers 2,610 $546.00 $1,425,060 63.50% Total 4,213 $546.00 $2,244,229 100.00%

BONDOWNERS' RISKS

There are certain risks inherent in an investment in bonds secured by special assessments issued by a public authority or governmental body in the State of Florida. Certain of these risks are described in the section above entitled "THE SERIES 2012 ASSESSMENTS"; however, certain additional risks are associated with the Series 2012 Bonds offered hereby. This section does not purport to summarize all risks that may be associated with purchasing or owning the Series 2012 Bonds and prospective purchasers are advised to read this Official Statement including all appendices hereto in its entirety to identify investment considerations relating to the Series 2012 Bonds.

I. In the event of the institution of bankruptcy or similar proceedings with respect to an owner of property subject to the Series 2012 Assessments, delays and impairment could occur in the payment of debt service on the Series 2012 Bonds as such bankruptcy could negatively impact the ability of: (i) the land owner being able to pay the Series 2012 Assessments; (ii) the County to sell tax certificates in relation to such property; and (iii) the District’s ability to enforce collection. In addition, the remedies available to the Owners of the Series 2012 Bonds, the Trustee and the District 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, the remedies specified by federal, state and local law and in the Indenture and the Series 2012 Bonds, including, without limitation, enforcement of the obligation to pay Series 2012 Assessments and the ability of the District to foreclose the lien of the Series 2012 Assessments, may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2012 Bonds (including Bond Counsel's approving opinion) will be qualified as to the enforceability of the various legal instruments by limitation imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. The inability, either partially or fully, to enforce remedies available respecting the Series 2012 Bonds could have a material adverse impact on the

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interest of the Owners hereof. Beyond legal delays that could result from bankruptcy, the ability of the County to sell tax certificates will be dependent upon various factors, including the interest rate which can be earned by ownership of such certificates and the value of the land which is the subject of such certificates and which may be subject to sale at the demand of the certificate holder after two years.

II. The principal security for the payment of the principal and interest on the Series 2012 Bonds is the timely collection of the Series 2012 Assessments. Series 2012 Assessments do not constitute a personal indebtedness of the owners of the land subject thereto, but are secured by a lien on such land. There is no assurance that the owners will be able to pay the Series 2012 Assessments or that they will pay such Series 2012 Assessments even though financially able to do so. The assessment of the benefits to be received by the land within the District as a result of implementation of the 2000A Project is not indicative of the realizable or market value of the land, which value may actually be higher or lower than the assessment of benefits. To the extent that the realizable or market value of the land benefited by the 2000A Project is lower than the assessment of benefits, the ability of the District to realize sufficient value from a foreclosure action to pay debt service on the Series 2012 Bonds may be adversely affected. Such adverse effect could render the District unable to collect delinquent Assessments, if any, and provided such delinquencies are significant, could negatively impact the ability of the District to make the full or punctual payment of debt service on the Series 2012 Bonds.

III. From roughly 2006 to date, the residential real estate market in Florida has experienced historically high levels of foreclosure for existing homes. The Development has experienced foreclosures, as well as drops in the value of homes. In addition, the market for subprime lending which was an integral part of real estate sales prior to 2007, has essentially evaporated which in turn impacts the ability of borrowers to obtain financing. No prediction can be made when such economic or market conditions will improve.

IV. The District has not granted, and may not grant under Florida law, a mortgage or security interest in the 2000 Project. Furthermore, the District has not pledged the revenues from the operation of the 2000A Project as security for, or a source of payment of, the Series 2012 Bonds. Neither has the District covenanted to establish rates, fees and charges for the 2000A Project at any specified levels. The Series 2012 Bonds are payable solely from, and secured solely by, the Series 2012 Assessments.

V. The willingness and/or ability of an owner of land within the Development to pay the Series 2012 Assessments could be affected by the existence of other taxes and assessments imposed upon the property by the District, the County or other governmental entities with jurisdiction over the District. Public entities whose boundaries overlap those of the District, such as the County, the Polk County School District and other special districts, could, without the consent of the owners of the land within the Development, impose additional taxes or assessments on the property within the Development. County, municipal, school, special district taxes and assessments, and voter-approved ad valorem taxes levied to pay principal of and interest on bonds, including the Series 2012 Assessments, are payable at one time. As referenced above, if a taxpayer does not make complete payment, he or she cannot designate specific line items on the tax bill as deemed paid in full. In such case, the Tax Collector does not accept such partial payment. Therefore, any failure to pay any one line item, whether or not it is the Series 2012 Assessments, would cause the Series 2012 Assessments not to be collected to that extent, which could have a significant adverse impact on the District's ability to make full or punctual payment of debt service on the Series 2012 Bonds. Public entities whose boundaries overlap those of the District could, without the consent of the owners of the land within the District, impose additional taxes or assessments on the property within the District. As referenced herein, the District may also impose additional assessments which could encumber the property burdened by the Series 2012 Assessments.

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VI. The Series 2012 Bonds may not constitute a liquid investment, and there is no assurance that a liquid secondary market will exist for the Series 2012 Bonds in the event an Owner thereof determines to solicit purchasers of the Series 2012 Bonds. Even if a liquid secondary market exists, there can be no assurance as to the price for which the Series 2012 Bonds may be sold. Such price may be lower than that paid by the current Owner of the Series 2012 Bonds, depending on the progress of the Development, existing market conditions and other factors.

VII. In addition to legal delays that could result from bankruptcy, the ability of the District to enforce collection of delinquent Series 2012 Assessments will be dependent upon various factors, including the delay inherent in any judicial proceeding to enforce the lien of the Series 2012 Assessments and the value of the land which is the subject of such proceedings and which may be subject to sale. See "THE SERIES 2012 ASSESSMENTS" herein. If the District has difficulty in collecting the Series 2012 Assessments, the Series 2012 Debt Service Reserve Accounts could be rapidly depleted and the ability of the District to pay debt service could be materially adversely affected.

VIII. The Indenture does not provide for any adjustment to the interest rate(s) borne by the Series 2012 Bonds in the event of a change in the tax-exempt status of the Series 2012 Bonds. Such a change could occur as a result of the District's failure to comply with tax covenants contained in the Indenture or due to a change in the United States income tax laws. Various proposals are mentioned from time to time by members of the Congress of the United States of America and others concerning reform of the United States income tax laws. Certain of these proposals, if implemented, could have the effect of diminishing the value of obligations of states and their political subdivisions, such as the Series 2012 Bonds, by eliminating or changing the tax-exempt status of interest on certain of such bonds. Whether any of such proposals will ultimately become law, and, if so, what effect such proposals could have upon the value of bonds such as the Series 2012 Bonds, cannot be predicted. However, it is possible that any such law could have a material and adverse effect upon the value of the Series 2012 Bonds.

IX. No application for credit enhancement or a rating on the Series 2012 Subordinate Bonds has been made, nor is there any reason to believe that the District would have been successful in obtaining either for the Series 2012 Subordinate Bonds had application been made.

X. If the District should commence a foreclosure action against a landowner for non-payment of the Series 2012 Assessments, such landowners may raise affirmative defenses to such foreclosure action, which although such affirmative defenses may be proven to be without merit, could result in delays in completing the foreclosure action. In addition, the District is required under the Indenture to fund the costs of such foreclosure. It is likely that the District will not have sufficient funds and will be compelled to request the Owners to provide funds to pay the costs of the foreclosure action. Under the Code, there are limitations on the amounts of Series 2012 Bond proceeds that can be used for such purpose.

XI. Under Florida law, a landowner may contest the assessed valuation determined for its property which forms the basis of ad valorem taxes such landowner must pay. During this contest period, the sale of a tax certificate under the Uniform Method will be suspended. If the Series 2012 Assessments are being collected along with ad valorem taxes pursuant to the Uniform Method, tax certificates will not be sold with respect to the Series 2012 Assessments even though the landowner is not contesting the amount of Series 2012 Assessment.

XII. Owners should note that several mortgage lenders have, in the past, raised legal challenges in the trial court to the primacy of the liens of special assessments in relation to the liens of mortgages burdening the same real property; in all such cases to date, the applicable courts have

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held that the special assessment liens (like those of the Series 2012 Assessments) are superior to those of the commercial mortgage lenders.

XIII. Owners of the Series 2012 Subordinate Bonds should carefully consider that upon the occurrence and continuance of any default, including a payment default, the Owners of such Series 2012 Subordinate Bonds will have no rights to participate in, or control, or share control over the remedies to be undertaken. Moreover, amounts on deposit in the Reserve Account held for the benefit of the Series 2012 Subordinate Bonds may be needed, and used, to pay debt service on the Series 2012 Senior Bonds. Finally, in the event, and to the extent, that principal of Series 2012 Assessments may be used to pay interest on the Series 2012 Senior Bonds, unless such funds are recovered and applied to pay principal of the Series 2012 Subordinate Bonds, the Series 2012 Assessment principal will be less that the Outstanding principal amount of Series 2012 Bonds, which will result in a permanent insufficiency of funds with which to pay current debt service.

XIV. The Supplemental Indenture provides that, prior to the accession of the Series 2012 Subordinate Bonds to senior lien status, Foreclosure Proceeds are to be applied to the redemption solely of the Series 2012 Senior Bonds. The Series 2012 Senior Bonds bear a lower rate of interest than the Series 2012 Subordinate Bonds. As the result, and because the Special Assessments which would have been foreclosed bear interest at a blended rate corresponding to a portion of both the Series 2012 Senior Bonds and the Series 2012 Subordinate Bonds, the revenues generated by the remaining Special Assessments will be less than the Debt Service on the remaining Outstanding Series 2012 Senior Bonds and the Series 2012 Subordinate Bonds. Accordingly, if a foreclosure should occur, for example, on property owned in bulk by one large landowner, it is unlikely that there will sufficient revenues from other sources, such as investment earnings, which could offset such deficiency and accordingly a default in the payment of the scheduled principal of, and/or interest on, the Series 2012 Subordinate Bonds could occur, notwithstanding that no Special Assessments were Delinquent. Even if such a payment default were not to occur, it is unlikely that the conditions to accession of the Series 2012 Subordinate Bonds to senior lien status could be satisfied during any period in which scheduled revenues from Special Assessments were less than scheduled Debt Service on all of the Outstanding Series 2012 Bonds.

XIV. On January 11, 2012, the Governor of the State of Florida issued an Executive Order (the "Executive Order") directing the Office of Policy and Budget in the Executive Office of the Governor (the "OPB") to examine the role of special districts in Florida, with a "special focus on increasing efficiency, fiscal accountability and transparency of operations to the public" and to submit reports to the Governor setting forth its findings and recommendations, including any recommendations for legislative action. The Executive Order states that the OPB's review is necessary to determine whether special districts are serving a legitimate public purpose, governed efficiently, levying taxes, fees and assessments appropriately, being held accountable to the public whose lives they directly impact, operating in a transparent manner and prudently spending taxpayers' dollars. The District is an independent special district of the State of Florida created pursuant to Chapter 190, Florida Statutes (the "Act"). It is not possible to determine at this time what recommendations, if any, the OPB will make pursuant to the Executive Order that will impact the Issuer and whether the Florida Legislature will implement any recommendations of the OPB through legislation that will impact the District. Section 190.16(14) of the Act provides in pertinent part that "The state pledges to the holders of any bonds issued under the Act that it will not limit or alter the rights of the district to levy and collect the ... assessments ... and to fulfill the terms of any agreement made with the holders of such bonds . . . and that it will not impair the rights or remedies of such holders."

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ESTIMATED SOURCES AND USES OF BOND PROCEEDS

Sources: $ 13,285,000.00

Par Amount of Series 2012A-1 Bonds 8,000,000.00

Par Amount of Series 2012A-2 Bonds 5,376,922.02

Plus Other Legally Available Moneys (1) (413,565.65)

Less: Original Issue Discount $ 26,248,356.37

Total Sources Uses:

Deposit to Escrow Account $ 23,777,950.00

Deposit Series 2012 Acquisition and Construction Account (Costs of Issuance) 246,698.04

Deposit to Series 2012A-1 Interest Account 659,715.17

Deposit to Series 2012A-2 Interest Account 386,352.53

Deposit to Debt Service Reserve Account 858,365.63

Underwriter’s Discount 319,275.00

Total Uses $ 26,248,356.37

(1) Represents moneys remaining in the funds and accounts created under the First Supplemental Indenture for the benefit of the 2000A Bonds and which are available to pay debt service on the Series 2012A-1 and Series 2012A-2 Bonds.

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DEBT SERVICE REQUIREMENTS

The following table sets forth the scheduled debt service on the Series 2012 Bonds:

Period Ending November 1st

Principal

Interest

Total Debt Service

2012 $ 0.00 $ 517,891.34 $ 517,891.34 2013 750,000.00 960,170.01 1,710,170.01 2014 775,000.00 936,528.13 1,711,528.13 2015 800,000.00 910,125.00 1,710,125.00 2016 830,000.00 881,562.50 1,711,562.50 2017 865,000.00 850,243.75 1,715,243.75 2018 895,000.00 816,093.75 1,711,093.75 2019 935,000.00 778,956.25 1,713,956.25 2020 975,000.00 738,518.75 1,713,518.75 2021 1,020,000.00 694,587.50 1,714,587.50 2022 1,070,000.00 646,731.25 1,716,731.25 2023 1,115,000.00 595,250.00 1,710,250.00 2024 1,175,000.00 539,843.75 1,714,843.75 2025 1,230,000.00 480,171.88 1,710,171.88 2026 1,295,000.00 416,975.01 1,711,975.01 2027 1,360,000.00 350,446.88 1,710,446.88 2028 1,430,000.00 279,900.00 1,709,900.00 2029 1,505,000.00 205,050.00 1,710,050.00 2030 1,590,000.00 126,037.50 1,716,037.50 2031 1,670,000.00 42,712.50 1,712,712.50

Totals $21,285,000.00 $11,767,795.75 $33,052,795.75

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THE DEVELOPMENT

The information appearing below has been furnished by the Developer for use in this Official Statement.

General

Solivita® (the “Development”) encompasses approximately 4,190.65 acres of which 3,028 acres of primarily residential property, is located within the District in the northeast corner of Polk County (the “County”). The District is comprised of 3,241 acres. The remaining acreage comprising the Development is coterminous with the boundaries of another community development district known as "Poinciana West Community Development District" (the "Poinciana West District"). The Poinciana West District is a separate district whose costs will be financed independently and defrayed through special assessments upon properties within such district. The Development is 13 miles from Kissimmee, 25 miles to the south of Orlando, 32 miles from the Orlando International Airport, and 15 miles south of Disney World. The major approach to the site is via Cypress Parkway, the community’s northern boundary. Cypress Parkway is a four lane divided roadway, approximately 1¾ miles west of Pleasant Valley Road, a four lane divided roadway which leads to several major roads and arteries in the Kissimmee and Orlando areas. The project accesses Cypress Parkway via a main north/south entrance road. Secondary access to the project is provided via Marigold Avenue, a two lane roadway which connects with U.S. 27 to the south of the Development through County roads. Air travel is provided by all major airlines through Orlando International Airport.

The District has constructed and maintains a variety of infrastructure improvements necessary for development within the Development. The 2000A Project is considered a community -wide system of improvements intended to confer special benefits to all of the lands within the District and represent a portion of the District's capital improvement program (“CIP”). With the proceeds of the Series 2000A Bonds, the District acquired and constructed some of the infrastructure necessary to support the Development as contemplated in the District's CIP and assessed the first 4,304 equivalent residential units within the District as described in the Special Assessment Methodology Supplement prepared by the Financial Consultant and included herein as Appendix A. The Developer has constructed and owns the golf course and the golf clubhouse. The remaining balance of infrastructure necessary for development within the District as contemplated in the District's CIP, has been completed, or is expected to be completed, by the Developer (either through Developer contributions or financed directly by the Developer). Single-family home prices for the Development currently range from $132,000 to nearly $375,000. The centerpiece of the community is a 36-hole golf course facility. The Development also features over 100,000 square feet of recreation facilities, including a spa/fitness center, arts and crafts buildings, grand ballroom and restaurants, golf clubhouse, 11 community pools, and an active recreation park that includes softball, tennis and pickleball facilities.

The 2000A assessment area which comprises the assessment area for the Series 2012 Bonds includes 3,153 single family lots, 1,084 multi-family units and 72 non-residential assessable units. There currently remain a total of 89 platted single family lots with no vertical construction although the lot development has been completed and 1,397 unplatted, planned future lots to be developed. The vacant residential lots (89), the undeveloped residential property, and the non-residential property are owned by the Developer.

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Sales/Marketing

The Development is being marketed to target the empty nester, pre-retiree, “snow-bird” and retiree active adult market. It is anticipated purchasers are being drawn to the community for its location, the amenities, and its active adult facilities.

Utilities

General. Remaining primary infrastructure improvements identified as potable water, sewage and reuse water is to be completed by the Developer. Potable water, sewage and reuse water is supplied by Toho Water Authority. A Development Master Utility Plan (MUP) has been prepared to determine the necessary potable water, sewage and reuse water infrastructure to meet the utility demands for the build out development of the Development. The primary utility improvements include potable water, sewage and reclaimed water.

Additional potable water supply and/or sewage treatment facilities as well as disposal facilities and associated transmission and force mains are required to maintain the development program in accordance with the anticipated lot development schedule. The Developer will acquire these improvements from third parties or acquire the required capacities in these improvements from the Toho Water Authority.

Potable Water. The potable water infrastructure mains range in size from 6" through 24" in diameter. All new potable water mains will be looped and in accordance with the requirements of the Florida Department of Environmental Protection and Toho Water Authority and include the appurtenant fittings, meters, valves, and valve boxes to effect service.

Sewage. All new central sewage (raw wastewater) collection and transmission systems continue to be installed within the roadways. The systems will include a series of manifold pumps and lift stations. Each pump and/or lift station will collect the sewage within its service area (generally a specific village or portion thereof). The primary infrastructure includes force mains, ranging in size from 6" though 16"; pump and lift stations, including telemetry, as well as the appurtenant fittings, valves, and flow meters required to connect the primary infrastructure to the Toho Water Authority wastewater system.

Reclaimed Water. All new reclaimed water systems will deliver reuse water for irrigation to the Development via a looped distribution system located within the roadways. The reclaimed water main piping system includes pipes, ranging in size from 4" to 16” in diameter. The system has been designed to accommodate the peak irrigation demands for the residential development.

Property Taxes, Other Assessments and Homeowner's Association Fees

In addition to annual debt service assessments, all landowners within the District also pay property taxes levied by the County, operation and maintenance fees levied by the District and a homeowner’s association fee. The millage rate for the area where the Development is located is 15.6056 mills. The District’s operation and maintenance fee for the fiscal year 2012 budget is $151.17 per residential unit. Non-residential property pays $151.17 per ERU (equivalent residential unit).

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THE DEVELOPER

The information appearing below has been furnished by the Developer for use in this Official Statement.

The Developer, Avatar Properties Inc. (f/k/a Avatar Holdings Inc.), is a wholly-owned subsidiary of AV Homes, Inc. (“AV Homes”), which on February 15, 2012 changed its name to AV Homes, Inc. trading on NASDAQ under the ticker symbol “AVHI.” AV Homes, and its consolidated subsidiaries, are subject to the information requirements of The Securities Exchange Act of 1934, as amended, and in accordance therewith files reports, proxy statements and other information with the SEC. You may read and copy materials filed with the SEC at the Public Reference Room of the SEC at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically. Information set forth in the Forms 8-K, 10-K and 10-Q, excluding a report (or portion thereof) furnished on Form 8-K, filed by the Company with the SEC since December 31, 2010 are hereby incorporated by reference. In addition, all documents filed by the Company pursuant to Section 13(a), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, excluding a report (or portion thereof) furnished on Form 8-K, after the date of this Official Statement and prior to the termination of the offering of the Bonds shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Potential investors should rely only on the information relating to the Developer incorporated by reference or provided in this Official Statement. We have not authorized anyone else to provide different information relating to the Developer.

AV Homes, through its subsidiaries, owns and develops land, primarily in various locations in Florida and Arizona. AV Homes’ real estate operations include the development, sale and management of active adult communities, the development and sale of residential communities (including construction of mid-priced single- and multi-family homes and the sale of home sites) and the development and sale of commercial and industrial properties.

As reported on the most recent Form 10-K, filed on March 26, 2012, AV Homes reported a net loss of $165.9 million or $13.33 per diluted share, on revenues of $89.0 million for the year ended December 31, 2011, compared to a net loss of $35.1 million or $3.07 per diluted share on revenues of $59.1 million for the year ended December 31, 2010. The results reflect non-cash impairment charges of $112 million, a goodwill impairment of $17.2 million, and continued losses from our homebuilding operations. The impairment charges primarily relate to land holdings that are no longer aligned with the Company’s long-term business plans. During the year ended December 31, 2011, the Company closed on 174 homes, compared to 184 units during the year ended December 31, 2011. Dollar volume increased to $41.3 million, compared to $37.1 million for the year ended December 31, 2010, reflecting higher average prices per unit. The business activities of AV Homes are subject to certain risk factors which are set out in the 10-K and as to which reference is hereby made.

SPECIAL ASSESSMENT METHODOLOGY

Fishkind & Associates, Inc., has prepared a Second Supplemental Assessment Report, dated

April 18, 2012 (the “Supplemental Report”), which supplements the Final Assessment Report dated February 16, 2000, as subsequently amended by the Supplemental Assessment Methodology, dated July 18, 2008 (the “Master Report” and, together with the Supplemental Report, the “Methodology Report”). The Methodology Report is included herein as Appendix A. The Master Report sets forth an

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overall method (the “Methodology”) for allocating the special benefit to the residential units in the District resulting from the financing or refinancing of the Original Project. The Series 2002 Assessments have been, and the Series 2012 Assessments will be, allocated in accordance with the Methodology, based on residential product type, all as set forth in the Supplemental Report. See “APPENDIX D-Methodology Report” for a more detailed description of the Methodology and the property in the Development subject to the Series 2012 Assessments.

TAX MATTERS

General. In the opinion of Greenberg Traurig, P.A., Bond Counsel, under existing statutes, regulations, rulings and court decisions and assuming continuing compliance with certain covenants and the accuracy of certain representations, (1) interest on the Series 2012 Bonds will be excludable from gross income for federal income tax purposes, (2) interest on the Series 2012 Bonds will not be an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, (3) interest on the Series 2012 Bonds will be taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations, and (4) the Series 2012 Bonds and the income thereon will not be subject to taxation under the laws of the State, except estate taxes and taxes under Chapter 220, Florida Statutes, as amended, on interest, income or profits on debt obligations owned by corporations as defined therein.

The above opinion on federal tax matters will be based on and will assume the accuracy of certain representations and certifications, and compliance with certain covenants, of the District to be contained in the transcript of proceedings and that are intended to evidence and assure the foregoing, including that the Series 2012 Bonds will be and will remain obligations, the interest on which is excludable from gross income for federal income tax purposes. Bond Counsel will not independently verify the accuracy of those certifications and representations. Bond Counsel will express no opinion as to any other tax consequences regarding the Series 2012 Bonds.

The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and to remain excludable from gross income for federal income tax purposes, some of which require future or continued compliance after issuance of the obligations in order for the interest to be and to continue to be so excludable from the date of issuance. Noncompliance with these requirements by the District may cause the interest on the Series 2012 Bonds to be included in gross income for federal income tax purposes and thus to be subject to federal income tax retroactively to the date of issuance of the Series 2012 Bonds. The District has covenanted to take the actions required of it for the interest on the Series 2012 Bonds to be and to remain excludable from gross income for federal income tax purposes, and not to take any actions that would adversely affect that excludability.

Except as described above, Bond Counsel will express no opinion regarding the federal income tax consequences resulting from the ownership of, receipt of interest on, or disposition of the Series 2012 Bonds. Prospective purchasers of the Series 2012 Bonds should be aware that the ownership of Series 2012 Bonds may have certain collateral federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations, foreign corporations doing business in the United States, S corporations and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these or other tax consequences will depend upon the particular tax status or other tax items of the owner of the Series 2012 Bonds. Prospective purchasers of the Series 2012 Bonds should consult their own tax advisors as to the

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impact of these other tax consequences. Bond Counsel will express no opinion regarding those consequences.

Purchasers of the Series 2012 Bonds at other than their original issuance at the respective prices or yields indicated on the inside cover of this Official Statement should consult their own tax advisors regarding other tax considerations such as the consequences of market discount.

From time to time, there are legislative proposals suggested, debated, introduced or pending in Congress that, if enacted into law, could alter or amend one or more of the federal tax matters described above including, without limitation, the excludability from gross income of interest on the Series 2012 Bonds, adversely affect the market price or marketability of the Bonds, or otherwise prevent the holders from realizing the full current benefit of the status of the interest thereon. It cannot be predicted whether or in what form any such proposal may be enacted, or whether, if enacted, any such proposal would apply to the Series 2012 Bonds. If enacted into law, such legislative proposals could affect the market price or marketability of the Series 2012 Bonds. Prospective purchasers of the Series 2012 Bonds should consult their tax advisors as to the impact of any proposed or pending legislation.

Original Issue Discount. The Series 2012 Bonds as indicated on the inside cover of this Official Statement (“Discount 2012 Bonds”) were offered and sold to the public at an original issue discount (“OID”). OID is the excess of the stated redemption price at maturity (the principal amount) over the “issue price” of a Discount 2012 Bond. The issue price of a Discount 2012 Bond is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the Discount 2012 Bonds of the same maturity is sold pursuant to that offering. For federal income tax purposes, OID accrues to the owner of a Discount 2012 Bond over the period to maturity based on the constant yield method, compounded semiannually (or over a shorter permitted compounding interval selected by the owner). The portion of OID that accrues during the period of ownership of a Discount 2012 Bond (i) is interest excludable from the owner’s gross income for federal income tax purposes to the same extent, and subject to the same considerations discussed above, as other interest on the Series 2012 Bonds, and (ii) is added to the owner’s tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale or other disposition of that Discount 2012 Bond. A purchaser of a Discount 2012 Bond in the initial public offering at the price for that Discount 2012 Bond stated on the inside cover of this Official Statement who holds that Discount 2012 Bond to maturity will realize no gain or loss upon the retirement of that Discount 2012 Bond.

Owners of Discount 2012 Bonds should consult their own tax advisers as to the determination for federal income tax purposes of the amount of OID properly accruable in any period with respect to the Discount 2012 Bonds and as to other federal tax consequences and the treatment of OID for purposes of state and local taxes on, or based on, income. Reference is made to the proposed form of the opinion of Bond Counsel attached hereto as “APPENDIX B ─ PROPOSED FORM OF BOND COUNSEL OPINION” for the complete text thereof. See also “LEGAL MATTERS” herein.

Information Reporting and Backup Withholding. Interest paid on tax-exempt bonds such as the Series 2012 Bonds is subject to information reporting to the Internal Revenue Service in a manner similar to interest paid on taxable obligations. This reporting requirement does not affect the excludability of interest on the Series 2012 Bonds from gross income for federal income tax purposes. However, in conjunction with that information reporting requirement, the Code subjects certain non-corporate owners of Series 2012 Bonds, under certain circumstances, to “backup withholding” at the rates set forth in the Code, with respect to payments on the Series 2012 Bonds and proceeds from the sale of Series 2012 Bonds. Any amount so withheld would be refunded or allowed as a credit against the federal income tax of such owner of Series 2012 Bonds. This

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withholding generally applies if the owner of Series 2012 Bonds (i) fails to furnish the payor such owner’s social security number or other taxpayer identification number (“TIN”), (ii) furnished the payor an incorrect TIN, (iii) fails to properly report interest, dividends, or other “reportable payments” as defined in the Code, or (iv) under certain circumstances, fails to provide the payor or such owner’s securities broker with a certified statement, signed under penalty of perjury, that the TIN provided is correct and that such owner is not subject to backup withholding. Prospective purchasers of the Series 2012 Bonds may also wish to consult with their tax advisors with respect to the need to furnish certain taxpayer information in order to avoid backup withholding.

DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS

Section 517.051, Florida Statutes, and the regulations promulgated thereunder (the "Disclosure Act") requires that the District make a full and fair disclosure of any bonds or other debt obligations that it has issued or guaranteed and that are or have been in default as to principal or interest at any time after December 31, 1975. The District was established on November 1, 1999 and, prior to the issuance of the Series 2000A Bonds, had never before incurred indebtedness or issued bonds.

VALIDATION

Bonds issued pursuant to the Master Indenture were validated by a Final Judgment of the Circuit Court in and for Polk County, Florida, entered on March 13, 2000. The period during which an appeal can be taken has expired.

LITIGATION

There is no pending or, to the knowledge of the District, any threatened litigation against the District of any nature whatsoever which in any way questions or affects the validity of the Series 2012 Bonds, or any proceedings or transactions relating to their issuance, sale, execution, or delivery, or the execution of the Indenture. Neither the creation, organization or existence of the District, nor the title of the present members of the Board of Supervisors has been challenged.

From time to time, the District expects to experience routine litigation and claims incidental to the conduct of its affairs. In the opinion of Counsel to the District, there are no actions presently pending or threatened, the adverse outcome of which would have a material adverse effect on the availability of the Series 2012 Trust Estate or the ability of the District to pay the Series 2012 Bonds from the Series 2012 Trust Estate.

CONTINUING DISCLOSURE

In order to comply with the continuing disclosure requirements of Rule 15c2-12(b)(5) of the Securities and Exchange Commission (the "SEC Rule"), the District will enter into a Continuing Disclosure Agreement (the "Disclosure Agreement"), the form of which is attached hereto as APPENDIX D. Pursuant to the Disclosure Agreement, the District has covenanted for the benefit of Owners to provide certain financial information and operating data relating to the District and the Series 2012 Bonds in each year (the "District Annual Report"), and to provide notices of the occurrence of certain enumerated material events. Such covenant by the District shall only apply so long as the Series 2012 Bonds remain outstanding under the Indenture.

46

The District Annual Report will be filed by the District with the Municipal Security Rulemaking Board's Electronic Municipal Markets Access ("EMMA") repository described in the form of the Disclosure Agreement attached hereto as APPENDIX E. The notices of material events will also be filed by the District with EMMA. In accordance with the Rule and pursuant to the Disclosure Agreement, the District has been appointed as the dissemination agent for all of the foregoing disclosure materials but may assign this role to a third party. The specific nature of the information to be contained in the District Annual Report and the notices of material events are described in APPENDIX E. The Disclosure Agreement will be executed by the District at the time of issuance of the Series 2012 Bonds. The foregoing covenants have been made in order to assist the Underwriter in complying with the SEC Rule.

The District has previously entered into continuing disclosure undertakings with respect to the Refunded Bonds. The District has been in compliance with its continuing disclosure undertakings with respect to the Refunded Bonds.

With respect to the Series 2012 Bonds, the Developer, as long as it is an Obligated Person (as defined in the Disclosure Agreement), is obligated to also provide continuing disclosure information pursuant to the SEC Rule.

UNDERWRITING

The Underwriter will agree, pursuant to a contract to be entered into with the District, subject to certain conditions, to purchase the Series 2012 Bonds from the District in a public offering on April 19, 2012 or such later date as the District and the Underwriters may agree (the "Closing Date") at a purchase price of $20,552,159.35 (representing the par amount of the Series 2012 Bonds of $21,285,000.00, minus an original issue discount of $413,565.65 and less an Underwriter's discount of $319,275.00). See "ESTIMATED SOURCES AND USES OF FUNDS" herein. The Underwriter's obligations are subject to certain conditions precedent and the Underwriter will be obligated to purchase all the Series 2012 Bonds if any are purchased.

The Underwriter intends to offer the Series 2012 Bonds at the offering prices set forth on the cover page of this Official Statement, which may subsequently change without prior notice. The Underwriter may offer and sell the Series 2012 Bonds to certain dealers (including dealers depositing the Series 2012 Bonds into investment trusts) at prices lower than the initial offering prices and such initial offering prices may be changed from time to time by the Underwriter.

LEGAL MATTERS

The Series 2012 Bonds are offered for delivery when, as and if issued by the District and accepted by the Underwriter, subject to prior sale, withdrawal or modification of the offer without notice and the receipt of the opinion of Greenberg Traurig, P.A., Miami, Florida, Bond Counsel, as to the validity of the Series 2012 Bonds and the excludability of interest thereon from gross income for federal income tax purposes. Certain legal matters will be passed upon for the District by its counsel, Hopping, Green & Sams, P.A., Tallahassee, Florida, for the Trustee by its counsel, Holland & Knight, LLP, Miami, Florida, and for the Underwriter by its counsel, Nabors, Giblin & Nickerson, P.A., Tampa, Florida.

47

AGREEMENT BY THE STATE

Under the Act, the State of Florida pledges to the holders of any bonds issued thereunder, including the Series 2012 Bonds, that it will not limit or alter the rights of the issuer of such bonds to own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects subject to the Act or to levy and collect taxes, assessments, rentals, rates, fees, and other charges provided for in the Act and to fulfill the terms of any agreement made with the holders of such bonds and that it will not in any way impair the rights or remedies of such holders.

FINANCIAL STATEMENTS

The general purpose financial statements of the District for the fiscal year ended September 30, 2010, included in this Official Statement have been audited by Dufresne & Associates, CPA, independent certified public accounts, as stated in their report appearing in Appendix E. The District has covenanted in the Continuing Disclosure Agreement attached hereto as Appendix D to provide its annual audit commencing with the audit for the District fiscal year ended September 30, 2010 to certain information repositories as described therein.

EXPERTS AND CONSULTANTS

The references herein to Fishkind & Associates, Inc. as Assessment Consultant have been approved by said firm. The Assessment Report prepared by such firm has been included as Appendix A attached hereto in reliance upon such firm as an expert in developing assessment methodologies. References to and excerpts herein from such Report do not purport to be adequate summaries of such Report or complete in all respects. Such Report is an integral part of this Official Statement and should be read in its entirety for complete information with respect to the subjects discussed therein.

CONTINGENT AND OTHER FEES

The District has retained Bond Counsel, District Counsel, the Assessment Consultant, the Underwriter (who has retained Underwriter's Counsel) and the Trustee (who has retained Trustee's Counsel), with respect to the authorization, sale, execution and delivery of the Series 2012 Bonds. Except for the payment of fees to District Counsel and the Assessment Consultant, the payment of the fees of the other professionals retained by the District is each contingent upon the issuance of the Series 2012 Bonds.

RATINGS

Standard & Poor's has assigned a rating of "A-" to the Series 2012 Senior Bonds. Such rating reflects only the views of such organization and any desired explanation of the significance of such rating should be obtained from the rating agency furnishing the same, at the following address: 55 Water Street, 38th Floor, New York, New York 11238. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2012 Senior Bonds.

48

No application for credit enhancement or a rating on the Series 2012 Subordinate Bonds has been made, nor is there any reason to believe that the District would have been successful in obtaining either for the Series 2012 Subordinate Bonds had application been made.

MISCELLANEOUS

Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Neither this Official Statement nor any statement that may have been made verbally or in writing is to be construed as a contract with the holders of the Series 2012 Bonds.

The information and expression of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder is to create, under any circumstances, any implication that there has been no change in the affairs of the District or the Development from the date hereof. However, certain parties to the transaction will, on the closing date of the Series 2012 Bonds, deliver certificates to the effect that nothing has come to their attention that would lead them to believe that applicable portions of the Official Statement contains an untrue statement of a material fact or omits to state a material fact that should be included herein for the purpose for which the Official Statement is intended to be used, or that is necessary to make the statements contained herein, in light of the circumstances under which they were made, not misleading and to the effect that from the date of the Official Statement to the date of closing of the Series 2012 Bonds that there has been no material adverse change in the information provided.

This Official Statement is submitted in connection with the sale of the securities referred to herein and may not be reproduced or used, as a whole or in part, for any other purpose. The appendices hereof are integral parts of this Official Statement and must be read in their entirety together with all foregoing statements.

POINCIANA COMMUNITY DEVELOPMENT DISTRICT

By: /s/ Robert Zimbardi Its: Chairman

Appendix A

Special Assessment Methodology Supplement

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`

POINCIANA COMMUNITY DEVELOPMENT DISTRICT

SUPPLEMENTAL ASSESSMENT METHODOLOGY REPORT

SERIES 2012A SPECIAL ASSESSMENT REFUNDING

BONDS

April 18, 2012

Prepared for: Board of Supervisors,

Poinciana Community Development District

Prepared by: Fishkind & Associates, Inc.

12051 Corporate Blvd. Orlando, Florida 32817

Poinciana CDD Supplemental Assessment Methodology

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POINCIANA COMMUNITY DEVELOPMENT DISTRICT SUPPLEMENTAL ASSESSMENT METHODOLOGY REPORT

Series 2012A Special Assessment Refunding Bonds

April 18, 2012

1.0 Introduction

1.1 Background

The Poinciana Community Development District (“District”) is an independent special-purpose unit of local government established on November 1, 1999 by the Florida Land and Water Adjudicatory Commission in order to provide public infrastructure facilities and services to the property owners located within the District. The District is governed by a five-member Board of Supervisors and has retained Severn Trent Management Services to serve as its District Manager.

The District has previously issued its $27,315,000 Series 2000A Special Assessment Bonds (“Series 2000A Bonds”) to fund a portion of its public infrastructure capital improvement program (“CIP”). The allocation of the District’s Series 2000A Bond debt to benefiting properties within the District is governed by the assessment methodology framework outlined in the District’s Assessment Methodology Report - Poinciana Community Development District, dated February 16, 2000 (“Master Methodology”) and the District’s Supplemental Assessment Methodology – Poinciana Community Development District, dated April 17, 2000 (“Series 2000A Supplemental Methodology”).

1.2 Purpose

The proceeds of the District’s Series 2000A Bonds helped fund a portion of the costs of the acquisition, construction, installation and equipping of stormwater management facilities, roadway improvements, and irrigation-related infrastructure providing a special benefit to properties located within the District. The District has decided to refund the outstanding

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Series 2000A Bonds via the issuance of the Series 2012A Special Assessment Refunding Bonds (“Series 2012A Bonds”). Refunding the Series 2000A Bonds will serve two purposes. First, the reduced debt service requirements of the Series 2012A Bonds will provide the District’s property owners with a net present value savings when compared to the debt service requirements of the Series 2000A Bonds. Second, the District’s property owners will see a reduction in the annual bond debt service assessments certified for collection each November.

This Supplemental Assessment Methodology Report (“Report”) outlines the allocation of the Series 2012A Bond par debt and annual assessments to properties within the District based upon the principles and allocation formulas found in the District’s Master Methodology. The assessments securing the Series 2012A Bonds will be levied on the same respective lands encumbered by the Series 2000A assessments (excluding only those parcels that have prepaid and extinguished their Series 2000A Bonds assessments). A complete list of the parcels that will be assessed to secure the Series 2012A Bonds is found at Exhibit “A”. The report is designed to conform to the requirements of Chapter 190 and Chapter 170, F.S. with respect to special assessments and is consistent with our understanding of the case law on this subject.

1.3 Requirements of a Valid Assessment Methodology

Valid special assessments under Florida law have two requirements. First, the properties assessed must receive a special benefit from the improvements paid for via the assessments. Second, the assessments must be fairly and reasonably allocated to the properties being assessed.

If these two characteristics of valid special assessments are adhered to, Florida law provides some latitude to legislative bodies, such as the District’s Board of Supervisors, in approving special assessments. Florida courts have found that the mathematical perfection of calculated special benefit is probably impossible. Only if the District’s Board was to act in an arbitrary, capricious, or unfair fashion could its assessment methods be overturned if challenged. The Master Methodology, the Series 2000A Bonds Supplemental Methodology, and this Report were specifically designed to fairly and reasonably allocate assessments to the District’s assessable properties receiving a special benefit from the implementation of the District’s CIP.

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1.4 Special Benefits and General Benefits

The proceeds of the Series 2000A Bonds were used to fund the implementation of a portion of the District’s CIP, which includes roadways, stormwater management and earthwork, and irrigation improvements. These improvements undertaken by the District created both special benefits and general benefits. However, the general benefits to the public at large are incidental in nature and are readily distinguishable from the special benefits which accrue to property within the District. The District’s CIP enabled properties within the District’s boundaries to be developed. Without the District’s CIP there would be no infrastructure to support development of land within the District. Further, without these improvements, development of the property located within the District would be prohibited by law.

There is no doubt that the general public, and property owners outside the District, benefit from the provision of certain portions of the District’s CIP. However, these benefits are incidental to the District’s CIP which is designed solely to meet the needs of property within the District. Properties outside the District do not depend upon the District’s CIP to obtain, or to maintain, their development entitlements. This fact alone clearly distinguishes the special benefits which District properties receive compared to those properties lying outside of the District’s boundaries.

2.0 Bond Debt Service Assessment Revision

2.1 Series 2012A Bond Details

The Series 2000A Bonds had, at issuance, a par value of $27,315,000. Due to the amortization of principal, assessment prepayments, and other factors, $22,960,000 in Series 2000A Bond principal currently remains outstanding. Table 1 below outlines the current details of the District’s Series 2000A Bonds.

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Table 1. Current Series 2000A Bond Details

Source Amount

Principal Outstanding $22,960,000 Debt Service Reserve Funds Remaining $2,163,536

Coupon Rate 7.125%Maximum Net Annual Debt Service $2,156,663Date of Maturity 2031

Refunding the remaining $22,960,000 in outstanding Series 2000A Bonds will require the issuance of Series 2012A Bonds with a par value of $21,285,000, including reserves and issuance costs. Table 2 below outlines the details of the Series 2012A Bonds.

Table 2. Series 2012A Bond Details

Uses AmountPar Value $21,285,000 Debt Service Reserve $858,366Average Coupon Rate 4.86%Maximum Annual Debt Service $1,716,731Date of Maturity 2031

As shown in Table 2, the net annual assessment revenues required to amortize the Series 2012A Bonds due May 1, 2031 total $1,716,731. This represents a reduction from the current Series 2000A Bond net annual debt service requirement of $2,156,663. As indicated, the Series 2012A Bonds will have a par value of $21,285,000, an average coupon rate of 4.86%, and a final maturity of May 1, 2031. The maturity date of the Series 2012A Bonds remains unchanged from that of the Series 2000A Bonds.

The funds raised by the issuance of $21,285,000 in Series 2012A Bonds will be insufficient to fully replace and extinguish the outstanding Series 2000A Bond principal of $22,960,000. The District expects to utilize funds available from the Series 2000A Bond fund accounts held by the trustee to

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help refund the outstanding Series 2000A Bonds. A summary of funds available to refund the Series 2000A Bonds is shown in Table 3 below.

Table 3. Sources of Funds Available toRefund the Series 2000A Bonds

Source AmountSeries 2012A Bonds Total Par $21,285,000.00Series 2012A Original Issue Discount -$413,565.35Total Series 2012A Bond Proceeds $20,871,434.65

Liquidation of 2000A Revenue Account $3,202,730.20Liquidation of 2000A Redemption Account $10,605.42Liquidation of 2000A Interest Account $0.01Liquidation of 2000A Construction Account $50.13Liquidation of 2000A Reserve Account $2,163,536.26Total Liquidated 2000A Bond Funds $5,376,922.02

Total Available Funds $26,248,356.67

The $26,248,356.67 in available funds outlined in Table 3 will be used as indicated in Table 4, below, to effect the refunding of the Series 2000A Bonds.

Table 4. Uses of Series 2012A Bond Funds

Uses AmountRedemption Price of Series 2000A Bonds $23,777,950.00Series 2012A Bonds Debt Service Reserve $858,365.63Costs of Issuance $246,698.04Underwriter's Discount $319,275.00Transfer to Series 2012A Revenue Account $1,046,067.70

Total Funds Used $26,248,356.37

2.2 Senior-Subordinate Series 2012A Bond Structure

As outlined in the Second Supplemental Trust Indenture, dated March 1, 2012, the District’s Series 2012A Bonds will actually be comprised of two separate series of bonds, the Senior Special Assessment Refunding

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Bonds, Series 2012A-1 (“Senior Bonds”), and the Subordinate Special Assessment Refunding Bonds, Series 2012A-2 (“Subordinate Bonds”) (the term “Series 2012A Bonds” refers to the collective total of both the Senior Bonds and Subordinate Bonds). Both series of bonds are payable from and secured by District bond debt service assessment collections. However, the pledge of Series 2012A Bond debt assessment collections to the Series 2012A-2 Subordinate Bonds shall, as provided in the Supplemental Indenture, be subordinate and inferior to the pledge thereof to the Series 2012A-1 Senior Bonds.

Although the Senior Bonds are first in priority in regards to the pledge of bond debt service assessments, this difference is irrelevant from an assessment perspective. Bond debt service assessments for either the Senior Bonds or Subordinate Bonds are not solely assigned to any specific parcel or parcels within the District. Rather, debt service assessments for both the Senior and Subordinate Bonds are spread on an equal proportionate basis across all lands assessed to secure the Series 2012A Bonds. Thus, this Report, and the accompanying District assessment resolutions, will only address the collective Series 2012A Bond debt service assessments to properties within the District without distinguishing between Senior Bond and Subordinate Bond debt service assessments.

District staff will periodically collect and transmit Series 2012A Bond debt service assessment collections to the District’s bond trustee. Such collections will not be earmarked as either Senior Bond or Subordinate Bond debt service by District staff. Thus, the Senior Bond and Subordinate Bond distinctions are relevant to the District’s bond trustee and bondholders and such distinction will govern the distribution of bond debt service assessments to bondholders by the trustee. However, the Senior Bond-Subordinate Bond distinction will not typically be material to District staff or District property owners, is not relevant to the apportionment of Series 2012A Bonds assessments, and so is not addressed in detail in this Report.

2.3 Series 2012A Bond Assessment Allocation

This Report allocates Series 2012A Bonds debt service assessments to properties within the District based on the principles and allocations found in the Master Methodology and Series 2000A Supplemental Methodology.

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The Series 2012A Bonds will be amortized over time with the proceeds of special assessments levied by the District’s Board of Supervisors. These special assessments serve as liens against the properties within the boundaries of the District that receive special benefits from the District’s CIP. This report is designed to conform to the requirements of Florida Statutes Chapters 170, 190, and 197, F.S. with respect to special assessments and is consistent with our understanding of the case law on this subject.

The Master Methodology and Series 2000A Supplemental Methodology examined the improvements that were implemented during the course of the District’s CIP and determined that the par and annual assessment levels assigned to properties to fund the CIP did not exceed the benefit those properties received from the CIP. It was also determined that the total Series 2000A Bonds assessment assigned to each property type was in proportion to the benefit received by other properties assessed. Series 2000A Bonds (and subsequently, Series 2012A Bonds) assessments are allocated to planned equivalent residential units (“ERUs”). One ERU is assigned to each planned platted residential lot, multi-family residence, and 1,774 square feet of commercial space planned for the District. The previous Series 2000A Bond assessments for ERUs planned for the District are found below at Table 5.

Table 5. Series 2000A Bonds Assessments

Land Use

ERUsAssessed to

Secure the Series 2000A

Bonds*

Series 2000A Bonds Gross

Annual Assmt./ERU*

*

Series 2000A Bonds Total

GrossAnnual

Assmt.**

Series 2000A Bond

PrincipalOutstanding/

ERU

Series 2000A Bond Principal

Outstanding -All ERUs

Platted Residential ERUs*** 2,745 $546.00 $1,498,770.00 $5,448.50 $14,956,146.18Town Center Commercial ERUs 72 $546.00 $39,312.00 $5,448.50 $392,292.36Unplatted Residential ERUs 1,397 $546.00 $762,762.00 $5,448.50 $7,611,561.46Total 4,214 $2,300,844.00 $22,960,000.00*One ERU is assigned to each platted single-family lot, multi-family residence, or 1,774 square feet of commercial space. **Includes a 7.0% gross-up to account for the statutory early payment discount and the current fees of the county tax collector and property appraiser. ***The Series 2000A Bonds debt service assessment originally assigned to 92 platted lots/ERUs has been prepaid and extinguished.

Table 5 outlines that certain properties (92 platted single-family lots/ERUs) have prepaid their allocation of Series 2000A Bonds debt. Any properties

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having previously prepaid the Series 2000A Bonds principal allocated to their property will not be subject to Series 2012A Bonds debt service assessments. Also, no refund on account of any present value savings realized by the refunding will be made to those properties having prepaid their Series 2000A Bonds assessment.

The Series 2012A Bonds principal and annual assessments assigned to properties to secure the repayment of the Series 2012A Bonds are all proportionate reductions from the previous Series 2000A Bond debt service assessments for those properties. Thus, the benefit conferred on each property as a result of the District’s CIP continues to exceed the total Series 2012A Bonds debt service assessment levied on each property to fund the CIP. The Series 2012A Bonds debt service assessments, which are outlined in Table 6 below, will replace the corresponding Series 2000A Bonds debt service assessments.

Table 6. Series 2012A Bonds Assessments

Land Use

ERUsAssessed to

Secure the Series 2012A

Bonds*

Series 2012ABonds Gross

Annual Assmt./

ERU**

Series 2012ABonds Total

GrossAnnual

Assmt.**

Series2012ABonds

PrincipalAssmt./ ERU

Series 2012ABond

PrincipalAssmt. - All

ERUsPlatted Residential ERUs*** 2,745 $438.05 $1,202,450.43 $5,051.02 $13,865,051.02Town Center Commercial ERUs 72 $438.05 $31,539.68 $5,051.02 $363,673.47Unplatted Residential ERUs 1,397 $438.05 $611,957.47 $5,051.02 $7,056,275.51Total 4,214 $1,845,947.58 $21,285,000.00*One ERU is assigned to each platted single-family lot, mult-family residence, or 1,774 square feet of commercial space.

**Includes a 7.0% gross-up to account for the statutory early payment discount and the current fees of the county tax collector and property appraiser. ***The Series 2000A Bonds debt service assessment originally assigned to 92 platted lots/ERUs has been prepaid and extinguished. Thus, these 92 lots/ERUs will not be subject to Series 2012A Bonds assessments.

2.4 Assignment of Series 2012A Bonds Assessments to Specific Parcels

As indicated in Tables 6 and 7 above, 2,745 individual platted residential ERUs/parcels and 72 town center commercial ERUs (contained within four parcels, as outlined in Exhibit “A”) have been assigned specific Series 2012A Bonds debt service assessments. Assessments for the balance of the development planned for the District (1,397 ERUs) has been allocated on an equal net developable-acreage basis among the remaining 258.5

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unplatted developable acres remaining in the District. These 258.5 unplatted developable acres are currently owned by Avatar Properties, Inc. (the “Developer”). The assignment of Series 2012A Bonds assessments to these 258.5 unplatted developable acres will convert from an acreage to an ERU basis at the earlier of the following two occurrences: 1) when some or all of the acreage has been included in a plat, or 2) when some or all of the property has transferred ownership from the Developer to a third party and both parties have agreed that Series 2012A Bonds assessments corresponding to the development entitlements for the transferred property should be assigned at the time of the transfer. Refinement of the Series 2012A Bonds assessments for these 258.5 unplatted developable acres shall also be subject to the true-up provision outlined in Section 4.1 below.

3.0 Special and Peculiar Benefit Accruing to District Properties on Account of the District’s CIP

Properties within the District have been assessed to secure bonds funding the District’s CIP. Construction of the District’s CIP provided roadway/transportation improvements, stormwater management improvements, and landscaping irrigation improvements, among others. More detail on the components of the District’s CIP can be found in the engineer’s reports accompanying the District’s previous bond issuances. The District’s CIP has allowed the full development of the lands within the District. The District’s boundaries cover approximately 3,241 acres within the Solivita community, a master planned mixed-use development. Each developable property within the District has received, and continues to receive, a special and peculiar benefit from the implementation of the District’s CIP.

[Section 4.0 is found on the following page.]

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4.0 True-Up Calculation and Assessment Roll

4.1 True-Up Calculation

Just as the remaining unplatted developable property within the District was subject to a true-up provision for the Series 2000A Bonds, the developable property that currently remains unplatted will also be subject to a true-up provision for the Series 2012A Bonds. An examination of the remaining unplatted developable properties is found at Table 7, below.

Table 7. Unplatted Parcels - Net Developable Acreage Assessments

Parcel ID

DevelopableUnplatted

Acres*ERU

Allocation

Preliminary Series 2012A Bond Principal

Assessment per Parcel

28-27-14-933530-001000 75.87 410.04 $2,071,126.3528-27-14-933530-042000 93.94 507.68 $2,564,313.9928-27-14-933540-001000 8.96 48.41 $244,521.6028-27-14-933541-004030 39.00 210.77 $1,064,583.1528-27-14-933541-004050** 3.00 16.21 $81,891.0128-27-14-933541-004060 7.58 40.97 $206,929.9828-27-14933541-004170 20.00 108.09 $545,940.0828-27-14-933542-000860 5.92 31.99 $161,579.5828-27-14-933543-001730 4.23 22.84 $115,389.77Totals 258.50 1,397.00 $7,056,275.51* The parcel location of the 258.50 total developable unplatted acres is subject to change over time as development proceeds. **Parcel ID 28-27-14-933541-004050 is planned to contain multi-family ERUs in addition to its existing commercial ERUs. Thus, it will be assessed both for its existing commercial ERUs and on a net acreage basis along with the other unplatted parcels for its proportionate share of the planned future residential ERUs.

The allocation of the 258.50 total remaining net developable unplatted acres among the parcels listed in Table 7 is based upon the best information available at this time and is subject to change over time as development proceeds within the District. However, the Series 2012A Bonds true-up calculation will always be based on the total 258.5 remaining unplatted developable acres. As outlined in Table 7, there are 1,397 planned ERUs remaining to be developed within these 258.5 acres. As shown in Table 8 below, this produces a remaining ERU per unplatted

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developable acre count of 5.4 and an initial Series 2012A Bonds principal assessment per remaining unplatted developable acre of $27,297.00.

Table 8. True-Up Threshold

Unassigned ERUs 1,397.00 Total Net Unplatted Acres 258.50 ERUs/Net Acre 5.4 Bonds Principal/Net Acre $27,297.00

Thus, each unplatted developable acre will be assigned a Series 2012A Bonds principal assessment of $27,297.00 at the time of issuance of the Series 2012A Bonds. As outlined in Section 2.4 above, the assignment of Series 2012A Bonds assessments to the 258.5 unplatted developable acres within the District will convert from an acreage to an ERU basis at the earlier of the following two occurrences: 1) when some or all of the acreage has been included in a plat, or 2) when some or all of the property has transferred ownership from the Developer to a third party and both parties have agreed that Series 2012A Bonds assessments corresponding to the development entitlements for the transferred property should be assigned at the time of the transfer. ERUs assigned by the District to a parcel pursuant to one of these two steps will be subtracted proportionately from the remaining unplatted developable acreage.

Future plats and property ownership changes for the remaining 258.5 unplatted developable acres must absorb at least 5.4 ERUs per acre and $27,297.00 in Series 2012A Bonds debt ($27,297.00 if the plat or property transfer occurs prior to May 1, 2013 – the amount in future years may be less as the Series 2012A Bonds are amortized over time). Plats or property transfers which cause the ERU density on the remaining unplatted developable land to exceed 5.4 ERUs per acre shall trigger a true-up payment. In addition, if debt is assigned by the District at the transfer of ownership of a parcel, a true-up payment may become due for that parcel if ultimate platting involves fewer ERUs than were assigned at the initial property transfer. However, a true-up payment may be suspended at the District’s sole discretion if the property owner can demonstrate to the District, and the District finds its sole discretion, that all necessary land use approvals, including applicable zoning, can

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reasonably and economically support a density higher than 5.4 ERUs per remaining unplatted developable acre.

4.2 Preliminary Series 2012A Bonds Assessment Roll

The preliminary assessment roll attached to this Report as Exhibit “A” illustrates the Series 2012A Bonds principal and annual assessment assigned to separate tax parcels located within the District. Each platted residential lot has been identified, assigned a single ERU as outlined herein, and assigned a corresponding Series 2012A Bond assessment. Four commercial “town center” parcels have been assigned their proportionate share of 72 ERUs based on the percentage of existing commercial development each of these parcels contains compared to the total amount of existing commercial space within the District. Unplatted parcels planned to contain residential development have been allocated ERUs based on the estimated number of net developable acres located within the District that they contain. These unplatted parcels have been assigned assessments based on the planned development of 1,397 residential ERUs, as shown in Table 6, above.

Platted parcels which have had their Series 2000A Bond assessments prepaid and extinguished will not be assessed to secure the Series 2012A Bonds and so have not been listed in Exhibit “A”. Note that the annual assessment levels shown are not discounted for the potential statutory early-payment discount of 4%. Thus, if the assessed property owner takes advantage of the early payment discount, the assessment paid will be up to 4% lower than the listed amount.

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Appendix B

Forms of Master Indenture and Supplemental Trust Indenture

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B-1

B-2

B-3

B-4

B-5

B-6

B-7

B-8

B-9

B-10

B-11

B-12

B-13

B-14

B-15

B-16

B-17

B-18

B-19

B-20

B-21

B-22

B-23

B-24

B-25

B-26

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182,329,738 037766010300

__________________________________

SECOND SUPPLEMENTAL TRUST INDENTURE

__________________________________

Between

POINCIANA COMMUNITY DEVELOPMENT DISTRICT

And

U.S. BANK NATIONAL ASSOCIATION, As successor in trust to First Union National Bank

As Trustee

_______________________________

Dated as of April 1, 2012 _______________________________

Authorizing and Securing

POINCIANA COMMUNITY DEVELOPMENT DISTRICT (POLK COUNTY, FLORIDA)

$13,285,000

SENIOR SPECIAL ASSESSMENT REFUNDING BONDS, SERIES 2012A-1

and

$8,000,000 SUBORDINATE SPECIAL ASSESSMENT REFUNDING BONDS,

SERIES 2012A-2

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TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS ............................................................................................................ 1

ARTICLE II THE SERIES 2012 BONDS ..................................................................................... 11 SECTION 2.01. Amounts and Terms of Series 2012 Bonds; Issue of Series 2012

Bonds ...................................................................................................... 11 SECTION 2.02. Execution .................................................................................................... 12 SECTION 2.03. Authentication ............................................................................................ 12 SECTION 2.04. Purpose, Designation and Denominations of, and Interest

Accruals on, the Series 2012 Bonds ...................................................... 12 SECTION 2.05. Interest on the Series 2012 Bonds ............................................................. 13 SECTION 2.06. Disposition of Series 2012 Bond Proceeds and Other Funds .................. 13 SECTION 2.07. Book-Entry Form of Series 2012 Bonds .................................................. 14 SECTION 2.08. Appointment of Registrar and Paying Agent ........................................... 14 SECTION 2.09. Limitation on Additional Bonds and Other Indebtedness ....................... 14 SECTION 2.10. Accession of Series 2012B Bonds to Parity Status with Series

2012A Bonds .......................................................................................... 15 ARTICLE III REDEMPTION OF SERIES 2012 BONDS ............................................................ 16

SECTION 3.01. Redemption Dates and Prices.................................................................... 16 SECTION 3.02. Notice of Redemption ................................................................................ 19

ARTICLE IV ESTABLISHMENT OF CERTAIN FUNDS AND ACCOUNTS; PREPAYMENTS; REMOVAL OF SPECIAL ASSESSMENT LIENS ........................................... 20

SECTION 4.01. Establishment of Certain Funds and Accounts ........................................ 20 SECTION 4.02. Series 2012 Revenue Account .................................................................. 23 SECTION 4.03. Power to Issue Series 2012 Bonds and Create Lien ................................. 26 SECTION 4.04. Foreclosure Proceeds ................................................................................. 26 SECTION 4.05. Prepayments; Removal of Special Assessment Liens ............................. 26

ARTICLE VI MISCELLANEOUS PROVISIONS ........................................................................ 28 SECTION 5.01. Interpretation of Supplemental Indenture ................................................. 28 SECTION 5.02. Limitation on Rights and Remedies of Owners of Series 2012B

Bonds ...................................................................................................... 28 SECTION 5.03. Covenant with Regard to Enforcement and Collection of

Delinquent Special Assessments ........................................................... 28 SECTION 5.04. Additional Covenants Regarding Assessments ........................................ 29 SECTION 5.05. Amendments .............................................................................................. 29 SECTION 5.06. Collection of Direct Billed Special Assessments ..................................... 29 SECTION 5.07. Counterparts ............................................................................................... 29 SECTION 5.08. Appendices and Exhibits ........................................................................... 29 SECTION 5.09. Payment Dates ........................................................................................... 30 SECTION 5.10. No Rights Conferred on Others ................................................................ 30 SECTION 5.11. [RESERVED] ............................................................................................ 30 SECTION 5.12. Collection of Special Assessments ........................................................... 30 SECTION 5.13. Additional Events of Default and Remedies ............................................ 30 SECTION 5.14. Provisions Relating to Bankruptcy or Insolvency of Landowner ........... 31 SECTION 5.15. Foreclosing of Special Assessment Lien .................................................. 32

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SECTION 5.16. Critical Personnel ....................................................................................... 33 EXHIBIT A FORM OF SERIES 2012A-1 BOND EXHIBIT B FORM OF SERIES 2012A-2 BOND

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THIS SECOND SUPPLEMENTAL TRUST INDENTURE (the “Second Supplemental Indenture”), dated as of April 1, 2012, between POINCIANA COMMUNITY DEVELOPMENT DISTRICT (the “Issuer” or the “District”), a local unit of special-purpose government organized and existing under the laws of the State of Florida, and U.S. BANK NATIONAL ASSOCIATION, as successor in trust to First Union National Bank, a national banking association duly organized and existing under the laws of the United States of America and having corporate trust offices in Orlando, Florida, as trustee (said national banking association and any bank or trust company becoming successor trustee under this Second Supplemental Indenture being hereinafter referred to as the “Trustee”);

W I T N E S S E T H:

WHEREAS, the Issuer is a local unit of special purpose government duly organized and existing under the provisions of the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended (the “Act”), by Rule 42AA-1 of the Florida Land and Water Adjudicatory Commission effective November 1, 1999 (the “Rule”); and

WHEREAS, the premises governed by the Issuer are described more fully in Exhibit A to the Master Indenture, dated as of April 1, 2000 (the “Original District Lands”) and consist of approximately 3,028 acres of land located entirely within the unincorporated area of Polk County, Florida (the “County”); and

WHEREAS, the Florida Land and Water Adjudicatory Commission amended Rule 42AA-1 (the “Revised Rule”) on June 18, 2008, to add an additional 213 acres to the Original District Lands (collectively with the Original District Lands, the “District Lands”); and

WHEREAS, the Issuer has been created for the purpose of delivering certain community development services and facilities for the benefit of the District Lands (as hereinafter defined); and

WHEREAS, the Issuer has heretofore determined to undertake, in one or more stages, the planning, financing, acquisition, construction, reconstruction, equipping and installation of certain potable water, reuse water (irrigation), and wastewater, stormwater management, land acquisition and mitigation pursuant to the Act for the special benefit of the District Lands (the “Project”); and

WHEREAS, pursuant to Resolution 2000-11 of the Issuer dated November 18, 1999, Resolution 2000-24 of the Issuer dated April 5, 2000, and the Master Indenture as amended and supplemented by that certain First Supplemental Trust Indenture dated as of April 1, 2000, by and between the Issuer and First Union National Bank, as predecessor trustee to U.S. Bank National Association (collectively, the “Prior Indenture”), the Issuer did, on April 25, 2000, issue its $27,315,000 Special Assessment Bonds, Series 2000A currently outstanding in the aggregate principal amount of $22,960,000 (the “Prior Bonds”)

WHEREAS, pursuant to Resolution No. 2012-02 adopted by the Issuer on March 21, 2012 (the “Bond Resolution”), the Issuer has determined it to be in the best interest of the residents of the Poinciana Community Development District (herein, the “District”) and the property owners of District Lands to pay and defease the Prior Bonds by the issuance of the Bonds (as defined below) in the manner described herein (herein, the “Refunding”); and

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WHEREAS, pursuant to the Master Indenture and this Second Supplemental Indenture (hereinafter sometimes collectively referred to as the “Indenture”), the Issuer has determined to issue $13,285,000 aggregate principal amount of Poinciana Community Development District (Polk County, Florida) Senior Special Assessment Refunding Bonds, Series 2012A-1 (the “Series 2012A-1 Bonds”) and $8,000,000 Poinciana Community Development District (Polk County, Florida) Subordinate Special Assessment Refunding Bonds, Series 2012A-2 (the “Series 2012A-2 Bonds” and together with the Series 2012A-1 Bonds, the “Series 2012 Bonds”) the proceeds of which will be used to pay and defease the Prior Bonds; and

WHEREAS, the execution and delivery of the Series 2012 Bonds and of this Second Supplemental Indenture have been duly authorized by the Governing Body of the Issuer and all things necessary to make the Series 2012 Bonds, when executed by the Issuer and authenticated by the Trustee, valid and binding legal obligations of the Issuer and to make this Second Supplemental Indenture a valid and binding agreement and, together with the Master Indenture, a valid and binding lien on the Series 2012 Trust Estate (as hereinafter defined) have been done;

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NOW THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS SECOND SUPPLEMENTAL TRUST INDENTURE WITNESSETH:

That the Issuer, in consideration of the premises, the acceptance by the Trustee of the trusts hereby created, the mutual covenants herein contained, the purchase and acceptance of the Series 2012 Bonds by the purchaser or purchasers thereof, and other good and valuable consideration, receipt of which is hereby acknowledged, and in order to further secure the payment of the principal and Redemption Price of, and interest on, all Series 2012 Bonds Outstanding (as defined in the Master Indenture) from time to time, according to their tenor and effect, and such other payments required to be made under the Master Indenture or hereunder, and such other payments due under any Credit Facility Agreement (as defined in the Master Indenture), and to further secure the observance and performance by the Issuer of all the covenants, expressed or implied in the Master Indenture, in this Second Supplemental Indenture and in the Series 2012 Bonds: (a) has executed and delivered this Second Supplemental Indenture and (b) does hereby, in confirmation of the Master Indenture, grant, bargain, sell, convey, transfer, assign and pledge unto the Trustee, and unto its successors in the trusts under the Master Indenture, and to them and their successors and assigns forever, all right, title and interest of the Issuer, in, to and under, subject to the terms and conditions of the Master Indenture and the provisions of the Master Indenture pertaining to the application thereof for or to the purposes and on the terms set forth in the Master Indenture the revenues derived by the Issuer from the Special Assessments (the "Series 2012 Pledged Revenues") and the Funds and Accounts (except for the Series 2012 Rebate Account) established hereby (the "Series 2012 Pledged Funds and Accounts") which shall comprise a part of the Trust Estate securing the Series 2012 Bonds (the "Series 2012 Trust Estate");

TO HAVE AND TO HOLD all the same by the Master Indenture granted, bargained, sold, conveyed, transferred, assigned and pledged, or agreed or intended so to be, to the Trustee and its successors in said trust and to it and its assigns forever;

IN TRUST NEVERTHELESS, except as in each such case may otherwise be provided in the Master Indenture and herein provided with respect to the Series 2012A-1 Bonds, upon the terms and trusts in the Indenture set forth for the equal and proportionate benefit, security and protection of all and singular the present and future Owners of the Series 2012 Bonds issued or to be issued under and secured by this Second Supplemental Indenture, without preference, priority or distinction as to lien or otherwise, of any one Series 2012A-1 Bond over any other Series 2012A-1 Bond by reason of priority in their issue, sale or execution;

PROVIDED, HOWEVER, that, unless and until such time as Accession (as defined hereinafter) has occurred, the lien and pledge of the Series 2012 Trust Estate to the Series 2012A-2 Bonds shall as hereinafter provided be subordinate and inferior to the lien and pledge thereof to the Series 2012A-1 Bonds, including, but not limited to, the rights to payment and enforcement of rights and remedies hereunder and under the Master Indenture; and

PROVIDED FURTHER HOWEVER, that if the Issuer, its successors or assigns, shall well and truly pay, or cause to be paid, or make due provision for the payment of the principal and Redemption Price of the Series 2012 Bonds or any Series 2012 Bond of a particular maturity issued, secured and Outstanding under this Second Supplemental Indenture and the interest due or to become due thereon, at the times and in the manner mentioned in the Series 2012 Bonds and

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this Second Supplemental Indenture, according to the true intent and meaning thereof, and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of the Master Indenture and this Second Supplemental Indenture to be kept, performed and observed by it, and shall pay or cause to be paid to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions of the Master Indenture and this Second Supplemental Indenture, then upon such final payments, this Second Supplemental Indenture and the rights hereby granted shall cease and terminate, with respect to all Series 2012 Bonds or any Series 2012 Bond of a particular maturity, otherwise this Second Supplemental Indenture shall remain in full force and effect;

THIS SECOND SUPPLEMENTAL INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Series 2012 Bonds issued and secured hereunder are to be issued, authenticated and delivered and all of the rights and property pledged to the payment thereof are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as in the Master Indenture (except as amended directly or by implication by this Second Supplemental Indenture), including this Second Supplemental Indenture, expressed, and the Issuer has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective Owners, from time to time, of the Series 2012 Bonds, as follows:

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ARTICLE I

DEFINITIONS

In this Second Supplemental Indenture capitalized terms used without definition shall have the meanings ascribed thereto in the Master Indenture and, in addition, the following terms shall have the meanings specified below, unless otherwise expressly provided or unless the context otherwise requires:

“Accession” shall mean the accession of the Series 2012A-2 Bonds to parity status as to lien upon the 2012 Trust Estate, as further described in Section 2.10.

“Arbitrage Certificate” shall mean the certificate of the Issuer delivered at the time of issuance of the Series 2012 Bonds setting forth the expectations of the Issuer with respect to the use of the proceeds of the Series 2012 Bonds and also containing certain covenants of the Issuer in order to achieve compliance with the Code relating to the tax-status of the Series 2012 Bonds.

“Authorized Denomination” shall mean, with respect to the Series 2012 Bonds, denominations of $5,000 and integral multiples of $5,000 in excess thereof.

“Continuing Disclosure Agreement” shall mean the Continuing Disclosure Agreement for the benefit of the owners of the Series 2012 Bonds, dated as of April 1, 2012, by and among the Issuer, the Developer and the Trustee.

“Defeasance Securities” shall mean, with respect to the Series 2012 Bonds, to the extent permitted by law, (a) cash deposits (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with obligations described in clause (b) hereof), (b) nonredeemable obligations of the United States or those for which the full faith and credit of the United States are pledged for the timely payment of principal and interest and (c) to the extent acceptable, at the time of defeasance, to Bond Counsel, any other Investment Securities.

“Developer” shall mean Avatar Properties Inc., a Florida corporation, and any affiliate or any entity which succeeds to all or any part of the interests and assumes any or all of the responsibilities of said entity, as the master developer of the District Lands.

“Escrow Agent” shall mean U.S. Bank National Association, and its permitted successors and assigns.

“Escrow Deposit Agreement” shall mean that certain Escrow Deposit Agreement dated as of April 1, 2012 by and between the Issuer and the Escrow Agent, as such agreement may be amended and supplemented from time to time in accordance with its terms.

“First Supplemental Indenture” shall mean that certain First Supplemental Trust Indenture dated as of April 1, 2000, by and between the Issuer and First Union National Bank, as predecessor trustee to U.S. Bank National Association.

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“Foreclosure Proceeds” shall mean the proceeds derived from foreclosure proceedings commenced by the Issuer pursuant to Florida Statutes Section 170.10, as amended, or any successor provision, or from the sale of any portion of the District Lands in lieu of foreclosure, against any portion of the District Lands on which Special Assessments have been levied and direct billed by the Issuer.

“Indenture” shall mean collectively, the Master Indenture and this Second Supplemental Indenture.

“Interest Payment Date” shall mean May 1 and November 1 of each year, commencing November 1, 2012.

“Investment Securities” shall mean and include any of the following securities, if and to the extent that such securities are legal investments for funds of the Issuer:

(i) Certificates or interest-bearing notes or obligations of the United States, or those for which the full faith and credit of the United States are pledged for the payment of principal and interest.

(ii) Investments in any of the following obligations provided such obligations are backed by the full faith and credit of the United States (a) the Export-Import Bank of the United States, (b) the Federal Housing Administration, (c) the Government National Mortgage Association (“GNMA”), (d) the Rural Economic Community Development Administration, (e) the Federal Financing Bank, (f) the Department of Housing and Urban Development, (g) the General Services Administration, (h) the U.S. Maritime Administration or (i) the Small Business Administration.

(iii) Investments in direct obligations in any of the following agencies which obligations are not fully guaranteed by the full faith and credit of the United States (a) senior obligations by the Federal Home Loan Bank System, (b) senior debt obligations and participation certificates (excluding stripped mortgage securities which are purchased at prices exceeding their principal amounts) issued by the Federal Home Loan Mortgage Corporation (“FHLMC”) or senior debt obligations and mortgage-backed securities (excluding stripped mortgage securities which are purchased at prices exceeding their principal amounts) of the Federal National Mortgage Association (“FNMA”) (c) obligations of the Resolution Funding Corporation (“REFCORP”) or (d) senior debt obligations of the Student Loan Marketing Association (“SLMA”) (excluding securities that do not have a fixed par value/or whose terms do not promise a fixed dollar amount at maturity or call date).

(iv) Investments in (a) U.S. dollar denominated deposit accounts, federal funds, bankers acceptances, and certificates of deposit of any bank whose short term debt obligations are rated “A-1+” by S&P or “P-1" by Moody's and maturing no more than 360 calendar days after the date of purchase (holding company ratings are not considered as rating of the bank) or (b) Certificates of deposit of any bank, which certificates are fully insured by the Federal Deposit Insurance Corporation (“FDIC”).

(v) Investments in money market funds rated “AAAm” by S&P.

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(vi) Commercial paper which is rated at the time of purchase in the single highest classification, “P-1" by Moody's, Inc. or “A-1+” by S&P and which matures not more than 270 calendar days after the date of purchase.

(vii) Pre-refunded municipal obligations defined as follows: any bonds or other obligations rated “AAA” by S&P and “Aaa” by Moody’s (based on an irrevocable escrow account or fund) of any state of the United States of America or any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice.

(viii) Municipal obligations rated “Aaa” or “AAA” by Moody’s or S&P, respectively, or general obligations of States with a rating of “A1/A+” or higher by both Moody’s and S&P.

The value of the above investments (paragraphs i-viii) shall be determined as follows:

“Value”, which shall be determined as of the end of each quarter, means that the value of any investments shall be calculated as follows:

a) for securities:

(1) computed on the basis of the bid price last quoted by the Federal Reserve Bank of New York on the valuation date and printed in the Wall Street Journal or the New York Times; or

(2) a valuation performed by a nationally recognized and accepted pricing service whose valuation method consists of the composite average of various bid price quotes on the valuation date; or

(3) the lower of two dealer bids on the valuation date. The dealer or their parent holding companies must be rated at least investment grade by S&P and Moody’s and must be market makers in the securities being valued.

b) as to certificates of deposit and banker’s acceptances: the face amount thereof, plus accrued interest.

(ix) Repurchase agreements with (a) any domestic bank, or domestic branch of a foreign bank, the long term debt which is rated at least “A’ by S&P and “A2” by Moody’s; or (b) any broker-dealer with “retail customers” or a related affiliate thereof which broker dealer has, or the parent company (which guarantees the provider) of which has, long term debt rated at least “A” by S&P and “A2” by Moody’s, which broker-dealer falls under the jurisdiction of the Securities Investors Protection Corporation; or (c) any other entity rated at least “A” by S&P and “A2” by Moody’s, provided that:

a) the repurchase agreement is collateralized with the obligations described in paragraphs (i) or (ii) above; or with obligations described in paragraph (iii) (a) and (b) above.

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b) the Trustee, or a third party acting solely as agent therefor or for the Issuer (“the “Holder of the Collateral”), will value the collateral securities at least weekly and will liquidate the collateral securities if any deficiency in the required collateral percentage in not restored within (2) business days.

c) the market value of the collateral must be maintained at: 104% of the total principal of the repurchase agreement for obligations described in paragraphs (i) and (ii); 105% of the total principal of the repurchase agreement for obligations described in paragraph (iii) (a) and (b) above.

d) the Holder of the Collateral has possession of the collateral or the collateral has been transferred to the Trustee or the Holder of the Collateral in accordance with applicable state and federal laws (other than be means of entries on the transferor’s books).

e) the repurchase agreement shall state and an opinion of counsel shall be rendered at the time such collateral is delivered that the Holder of the Collateral has a perfected first priority security interest in the collateral, and substituted collateral and all proceeds thereof.

f) the repurchase agreement shall provide that if during its term the provider’s rating by either Moody’s or S&P is withdrawn or suspended or falls below “A-“ by S&P or “A3” by Moody’s, as appropriate, the provider must, at the direction of the Issuer or the Trustee , within 10 days of receipt of such direction, repurchase all collateral and terminate the agreement, with no penalty or premium to the Issuer or Trustee.

(x) Investment agreements with (a) a domestic or foreign bank or corporation (other than a life or property casualty insurance company) the long term debt of which, or, in the case of a guaranteed corporation the long term debt is rated at least "AA" by S&P and "Aa2" by Moody's; or (b) a monoline municipal bond insurance company or a subsidiary thereof whose claims paying ability is rated at least "AA" by S&P and "Aa2" by Moody's; provided, that in all cases, by the terms of the investment agreement:

a) interest payments are to be made to the Trustee at least one business day prior to debt service payment dates on the Series 2012 Bonds and in such amounts as are necessary to pay debt service (or, if the investment agreement is for the construction fund, construction draws) on the Series 2012 Bonds;

b) the invested funds are available for withdrawal without penalty or premium, at any time upon not more than seven days' prior notice (which notice may be amended or withdrawn at any time prior to the specified withdrawal date); provided that the Indenture specifically requires the Issuer or the Trustee to give notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid;

c) the investment agreement shall state that it is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof;

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d) a fixed guaranteed rate of interest is to be paid on invested funds and all future deposits, if any, required to be made to restore the amount of such funds to the level specified under the Indenture;

e) the term of the investment agreement does not exceed seven years, except that an investment agreement for the Debt Service Reserve Fund may extend until the maturity for the Series 2012 Bonds;

f) the Issuer or the Trustee receives the opinion of domestic counsel (which opinion shall be addressed to the Issuer) that such investment agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms and of foreign counsel (if applicable) in form and substance acceptable, and addressed to, the Issuer;

g) the investment agreement shall provide that if during its term:

(1) the provider's rating by either S&P or Moody's falls below 'AA-' or 'Aa3' respectively, the provider must, at the direction of the Issuer or the Trustee (who shall give such direction if, but only if, so directed by the Issuer), within 10 days of receipt of such direction, either (i) collateralize the investment agreement by delivering or transferring in accordance with applicable state and federal laws (other than by means of entries on the provider's books) to the Issuer, the Trustee or a third party acting solely as agent therefor (the "Holder of the Collateral") Permitted Collateral which are free and clear of any third-party liens or claims at the Collateral Levels set forth below; or (ii) repay the principal of and accrued but unpaid interest on the investment (the choice of (i) or (ii) above shall be that of the Issuer or Trustee, as appropriate), and

(2) the provider's rating by either Moody's or S&P is withdrawn or suspended or falls below "A-" or "A3" by S&P or Moody's, as appropriate, the provider must, at the direction of the Issuer or the Trustee (who shall give such direction if, but only if, so directed by the Issuer), within 10 days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment in either case with no penalty or premium to the Issuer or Trustee;

h) The investment agreement shall state and an opinion of counsel shall be rendered that the Trustee has a perfected first priority security interest in the Permitted Collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Trustee is in possession); and

(a) the investment agreement must provide that if during its term

(1) the provider shall default in its payment obligations, the provider's obligations under the investment agreement shall, at the direction of the Obligor or the Trustee (who shall give such direction if so directed by the Issuer), be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Obligor or Trustee, as appropriate;

(2) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. ("event of insolvency"), the provider's

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obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Obligor or Trustee, as appropriate;

(3) the provider fails to perform any of its obligations under the Investment Agreement (other than obligations related to payment or rating) and such breach continues for ten (10) Business Days or more after written notice thereof is given by the Trustee to the provider, it shall be an Event of Default; or

(4) a representation or warranty made by the provider proves to have been incorrect or misleading in any material respect when made, it shall be an Event of Default

Permitted Collateral for Investment Agreements (“Permitted Collateral”):

A. U.S. direct Treasury obligations,

B. Senior debt and/or mortgage backed obligations of GNMA, FNMA or FHLMC and other government sponsored agencies backed by the full faith and credit of the U.S. government.

C. Collateral levels must be 104% of the total principal deposited under the investment agreement for U.S. direct Treasury obligations, GNMA obligations and full faith and credit U.S. government obligations and 105% of the total principal deposited under the investment agreement for FNMA and FHLMC.

D. The collateral must be held be a third party, segregated and marked to market at least weekly.

(xi) Forward delivery agreements (supported by appropriate opinions of counsel).

(xii) Any other form of investment permitted under applicable law.

“Master Indenture” shall mean the Master Trust Indenture, dated as of April 1, 2000, by and between the Issuer and the Trustee, as supplemented and amended with respect to matters pertaining solely to the Master Indenture or the Series 2012 Bonds (as opposed to supplements or amendments relating to Series of Bonds other than the Series 2012 Bonds as specifically defined in this Second Supplemental Indenture).

“Original Project” shall mean the planning, financing, acquisition, construction, reconstruction, equipping and installation of certain potable water, reuse water (irrigation), and wastewater, stormwater management, land acquisition and mitigation pursuant to the Act for the special benefit of the District Lands (as further described in Exhibit A to the First Supplemental Indenture).

“Participating Underwriter” or “Underwriter” shall mean MBS Capital Markets, LLC, the original underwriter of the Series 2012 Bonds required to comply with the Rule in connection with the offering of the Series 2012 Bonds.

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“Paying Agent” shall mean U. S. Bank National Association, Orlando, Florida and its successors and assigns as Paying Agent hereunder.

“Pledged Revenues” shall mean with respect to the Series 2012 Bonds (a) all revenues received by the Issuer from Special Assessments levied and collected on the District Lands with respect to the Series 2012 Bonds, including, without limitation, amounts received from any foreclosure proceeding for the enforcement of collection of such Special Assessments or from the issuance and sale of tax certificates with respect to such Special Assessments, and (b) all moneys on deposit in the Funds and Accounts established under the Indenture; provided, however, that Pledged Revenues shall not include (A) any moneys transferred to the Rebate Fund, or investment earnings thereon and (B) “special assessments” levied and collected by the Issuer under Section 190.022 of the Act for maintenance purposes or “maintenance special assessments” levied and collected by the Issuer under Section 190.021(3) of the Act (it being expressly understood that the lien and pledge of the Indenture shall not apply to any of the moneys described in the foregoing clauses (A) and (B) of this proviso).

“Prepayment” shall mean the payment by any owner of property of the amount of Special Assessments encumbering its property, in whole or in part, prior to its scheduled due date, including optional prepayments and prepayments which become due pursuant to the “true-up” mechanism contained in the Assessment Resolution.

“Registrar” shall mean U. S. Bank National Association, Orlando, Florida and its successors and assigns as Registrar hereunder.

“Regular Record Date” shall mean the fifteenth day (whether or not a Business Day) of the calendar month next preceding each Interest Payment Date.

“Report” shall mean the Assessment Methodology Poinciana Community Development District, adopted on February 16, 2000, as supplemented by the report entitled Supplemental Assessment Methodology dated April 17, 2000, the report entitled Supplemental Assessment Methodology Poinciana Community Development District Boundary Expansion dated July 18, 2008, and the Supplemental Assessment Methodology Report dated April 18, 2012, each prepared by Fishkind & Associates, Inc.

“Resolution” shall mean, collectively, (i) Resolution 2000-11 of the Issuer dated November 18, 1999, pursuant to which the Issuer authorized the issuance of not exceeding $125,000,000 aggregate principal amount of its special assessment bonds to finance the planning, financing, acquisition, construction, reconstruction, equipping and installation of certain potable water, reuse water (irrigation), wastewater, stormwater management, roadway, land acquisition and mitigation and for the special benefit of the District Lands or portions thereof, (ii) Resolution 2000-24 of the Issuer dated April 5, 2000, pursuant to which the Issuer authorized the issuance of the Series 2000 Bonds in an aggregate principal amount not to exceed $28,000,000 to finance a portion of the Series 2000 Project, specifying the details of the Series 2000 Bonds and delegating authority to the Chairman to award and sell the Series 2000 Bonds and (iii) Resolution 2012-02 of the Issuer dated March 21, 2012, pursuant to which the Issuer authorized the issuance of the Series 2012 Bonds in an aggregate principal amount not to exceed

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$22,000,000, specifying the details of the Series 2012 Bonds and delegating authority to the Chairman to award and sell the Series 2012 Bonds.

“S&P” shall mean Standard & Poor’s Credit Market Service, a division of The McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer and acceptable to the Trustee.

“Second Supplemental Indenture” shall mean this Second Supplemental Trust Indenture, dated as of April 1, 2012, by and between the Issuer and the Trustee, as supplemented or amended.

“Series 2012 Acquisition and Construction Account” shall mean the Account so designated, established as a separate account within the Acquisition and Construction Fund pursuant to Section 4.01(a) of this Second Supplemental Indenture.

“Series 2012 Bond Redemption Fund” shall mean the Series 2012 Bond Redemption Fund established pursuant to Section 4.01(g) of this Second Supplemental Indenture.

“Series 2012 Bonds” shall mean the Series 2012A-1 Bonds and the Series 2012A-2 Bonds.

“Series 2012 Prepayment Principal” shall mean the portion of a Prepayment corresponding to the principal amount of Special Assessments being prepaid.

“Series 2012 Revenue Account” shall mean the Account so designated, established as a separate account within the Revenue Fund pursuant to Section 4.01(b) of this Second Supplemental Indenture.

“Series 2012A-1 Bonds” shall mean the $13,285,000 aggregate principal amount of Poinciana Community Development District (Polk County, Florida) Senior Special Assessment Bonds, Series 2012A-1, to be issued as fully registered Bonds in accordance with the provisions of the Master Indenture and this Second Supplemental Indenture, and secured and authorized by the Master Indenture and this Second Supplemental Indenture.

“Series 2012A-1 Debt Service Reserve Account” shall mean the Account so designated, established as a separate account within the Debt Service Reserve Fund pursuant to Section 4.01(f) of this Second Supplemental Indenture.

“Series 2012A-1 Debt Service Reserve Requirement” shall mean, with respect to the Series 2012A-1 Bonds, $535,747.59, being an amount equal to 50% of the Maximum Debt Service Requirement for Outstanding Series 2012A-1 Bonds calculated as of the date of original issuance thereof.

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“Series 2012A-1 Interest Account” shall mean the Account so designated, established as a separate account within the Debt Service Fund pursuant to Section 4.01(d) of this Second Supplemental Indenture.

“Series 2012A-1 Principal Account” shall mean the Account so designated, established as a separate account within the Debt Service Fund pursuant to Section 4.01(c) of this Second Supplemental Indenture.

“Series 2012A-1 Sinking Fund Account” shall mean the Account so designated, established as a separate account within the Debt Service Fund pursuant to Section 4.01(e) of this Second Supplemental Indenture.

“Series 2012A-2 Bonds” shall mean the $8,000,000 aggregate principal amount of Poinciana Community Development District (Polk County, Florida) Subordinate Special Assessment Bonds, Series 2012A-2, to be issued as fully registered Bonds in accordance with the provisions of the Master Indenture and this Second Supplemental Indenture, and secured and authorized by the Master Indenture and this Second Supplemental Indenture.

“Series 2012A-2 Debt Service Reserve Account” shall mean the Account so designated, established as a separate account within the Debt Service Reserve Fund pursuant to Section 4.01(f) of this Second Supplemental Indenture.

“Series 2012A-2 Debt Service Reserve Requirement” shall mean, with respect to the Series 2012A-2 Bonds, $322,618.04, being an amount equal to 50% of the Maximum Debt Service Requirement for Outstanding Series 2012A-2 Bonds calculated as of the date of original issuance thereof.

“Series 2012A-2 Interest Account” shall mean the Account so designated, established as a separate account within the Debt Service Fund pursuant to Section 4.01(d) of this Second Supplemental Indenture.

“Series 2012A-2 Principal Account” shall mean the Account so designated, established as a separate account within the Debt Service Fund pursuant to Section 4.01(c) of this Second Supplemental Indenture.

“Series 2012A-2 Sinking Fund Account” shall mean the Account so designated, established as a separate account within the Debt Service Fund pursuant to Section 4.01(e) of this Second Supplemental Indenture.

“Special Assessments” shall mean (a) the net proceeds derived from the levy and collection of “special assessments,” as provided for in Sections 190.011(14) and 190.022 of the Act (except for any such special assessments levied and collected for maintenance purposes), against the lands located within the Issuer that are subject to assessment as a result of the refinancing of the Original Project and the financing of the Project or any portion thereof, and (b) the net proceeds derived from the levy and collection of “benefit special assessments,” as provided for in Section 190.021(2) of the Act, against the lands within the Issuer that are subject to assessment as a result of the refinancing of the Original Project , and the financing of the

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Project or any portion thereof, and in the case of both “special assessments” and “benefit special assessments,” including the interest and penalties on such assessments, pursuant to all applicable provisions of the Act and Chapter 170, Florida Statutes, and Chapter 197, Florida Statutes (and any successor statutes thereto), including, without limitation, any amount received from any foreclosure proceeding for the enforcement of collection of such assessments or from the issuance and sale of tax certificates with respect to such assessments, less (to the extent applicable) the fees and costs of collection thereof payable to the Tax Collector and less certain administrative costs payable to the Property Appraiser pursuant to the Property Appraiser and Tax Collector Agreement. “Special Assessments” shall not include “maintenance special assessments” levied and collected by the Issuer under Section 190.021(3) of the Act.

The words “hereof”, “herein”, “hereto”, “hereby”, and “hereunder” (except in the form of Series 2012 Bonds), refer to the entire Indenture.

Every “request”, “requisition”, “order”, “demand”, “application”, “notice”, “statement”, “certificate”, “consent”, or similar action hereunder by the Issuer shall, unless the form or execution thereof is otherwise specifically provided, be in writing signed by the Chairman or Vice Chairman and the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary or Responsible Officer of the Issuer.

All words and terms importing the singular number shall, where the context requires, import the plural number and vice versa. Unless otherwise specifically provided in this Second Supplemental Indenture, all terms defined in Article I of the Master Indenture shall have the same meaning in this Second Supplemental Indenture as if expressly defined in this Second Supplemental Indenture.

[End of Article I]

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ARTICLE II

THE SERIES 2012 BONDS

SECTION 2.01. Amounts and Terms of Series 2012 Bonds; Issue of Series 2012 Bonds. No Series 2012 Bonds may be issued under this Second Supplemental Indenture except in accordance with the provisions of this Article and Articles II and III of the Master Indenture.

(a) The total principal amount of Series 2012 Bonds that may be issued under this Second Supplemental Indenture is expressly limited to $21,285,000. The Series 2012A-1 Bonds shall be numbered consecutively from AR-1 and upwards. The Series 2012A-2 Bonds shall be numbered consecutively from BR-1 and upwards.

(b) (i) The Series 2012A-1 Bonds will be issued in the aggregate principal amount of $13,285,000, and will mature, subject to the right of prior redemption in accordance with their terms, and bear interest on the dates and at rates per annum set forth immediately below:

$7,980,000 Series 2012A-1 Serial Bonds

Maturity Date (May 1)

Principal Amount

Interest Rate

2013 $515,000 1.600% 2014 525,000 2.125 2015 535,000 2.250 2016 550,000 2.500 2017 565,000 2.750 2018 580,000 3.000 2019 600,000 3.250 2020 620,000 3.500 2021 645,000 3.750 2022 670,000 3.875 2023 695,000 4.000 2024 725,000 4.250 2025 755,000 4.375

$1,615000 Series 2012A-1 Term Bonds due May 1, 2027 at 4.375% $3,690,000 Series 2012A-1 Term Bonds due May 1, 2031 at 4.500%

(ii) The Series 2012A-2 Bonds will be issued in the aggregate principal amount of $8,000,000, and will mature, subject to the right of prior redemption in accordance with their terms, and bear interest on the dates and at rates per annum set forth immediately below:

$ 2,710,000 Series 2012A-2 Term Bonds due May 1, 2021 at 5.750%

$5,290,000 Series 2012A-2 Term Bonds due May 1 2031 at 6.000%

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(c) Any and all Series 2012A-1 Bonds and, subject to Section 2.10, Series 2012A-2 Bonds shall be issued substantially in the forms attached hereto as Exhibit B or Exhibit C, respectively, with such appropriate variations, omissions and insertions as are permitted or required by the Indenture and with such additional changes as may be necessary or appropriate to conform to the provisions of the Resolution. The District shall issue the Series 2012 Bonds upon execution of this Second Supplemental Indenture and satisfaction of the requirements of Section 3.01 of the Master Indenture; and the Trustee shall, at the Issuer’s request, authenticate such Series 2012 Bonds and deliver them as specified in the request.

SECTION 2.02. Execution. The Series 2012 Bonds shall be executed by the Issuer as set forth in the Master Indenture.

SECTION 2.03. Authentication. The Series 2012 Bonds shall be authenticated as set forth in the Master Indenture. No Series 2012 Bond shall be valid until the certificate of authentication shall have been duly executed by the Trustee, as provided in the Master Indenture.

SECTION 2.04. Purpose, Designation and Denominations of, and Interest Accruals on, the Series 2012 Bonds.

(a) The Series 2012 Bonds are being issued hereunder in order to provide funds (i) for the defeasance of the Prior Bonds, (ii) to fund the Series 2012A-1 Debt Service Reserve Requirement and the initial Series 2012A-2 Debt Service Reserve Requirement, and (iii) to pay costs of issuance of the Series 2012 Bonds. The Series 2012A-1 Bonds shall be designated “Poinciana Community Development District (Polk County, Florida) Senior Special Assessment Refunding Bonds, Series 2012A-1” and the Series 2012A-2 Bonds shall be designated “Poinciana Community Development District (Polk County, Florida) Subordinate Special Assessment Refunding Bonds, Series 2012A-2”, and shall be issued as fully registered bonds without coupons in Authorized Denominations.

(b) The Series 2012 Bonds shall be dated May 1, 2012. Interest on the Series 2012 Bonds shall be payable on each Interest Payment Date to maturity or prior redemption. Interest on the Series 2012 Bonds shall be payable from the most recent Interest Payment Date next preceding the date of authentication thereof to which interest has been paid, unless the date of authentication thereof is a May 1 or November 1 to which interest has been paid, in which case from such date of authentication, or unless the date of authentication thereof is prior to November 1, 2012, in which case from May 1, 2012 or unless the date of authentication thereof is between a Record Date and the next succeeding Interest Payment Date, in which case from such Interest Payment Date.

(c) Except as otherwise provided in Section 2.07 of this Second Supplemental Indenture in connection with a book entry only system of registration of the Series 2012 Bonds, the principal or Redemption Price of the Series 2012 Bonds shall be payable in lawful money of the United States of America at the designated corporate trust office of the Paying Agent upon presentation of such Series 2012 Bonds. Except as otherwise provided in Section 2.07 of this Second Supplemental Indenture in connection with a book entry only system of registration of the Series 2012 Bonds, the payment of interest on the Series 2012 Bonds shall be made on each Interest Payment Date to the Owners of the Series 2012 Bonds by check or draft drawn on the

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Paying Agent and mailed on the applicable Interest Payment Date to each Owner as such Owner appears on the Bond Register maintained by the Registrar as of the close of business on the Regular Record Date, at his address as it appears on the Bond Register. Any interest on any Series 2012 Bond which is payable, but is not punctually paid or provided for on any Interest Payment Date (hereinafter called “Defaulted Interest”) shall be paid to the Owner in whose name the Series 2012 Bond is registered at the close of business on a Special Record Date to be fixed by the Trustee, such date to be not more than fifteen (15) nor less than ten (10) days prior to the date of proposed payment. The Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class, postage-prepaid, to each Owner of record as of the fifth (5th) day prior to such mailing, at his address as it appears in the Bond Register not less than ten (10) days prior to such Special Record Date. The foregoing notwithstanding, any Owner of Series 2012 Bonds in an aggregate principal amount of at least $1,000,000 shall be entitled to have interest paid by wire transfer to such Owner to the bank account number on file with the Paying Agent, upon requesting the same in a writing received by the Paying Agent at least fifteen (15) days prior to the relevant Interest Payment Date, which writing shall specify the bank, which shall be a bank within the continental United States, and bank account number to which interest payments are to be wired. Any such request for interest payments by wire transfer shall remain in effect until rescinded or changed, in a writing delivered by the Owner to the Paying Agent, and any such rescission or change of wire transfer instructions must be received by the Paying Agent at least fifteen (15) days prior to the relevant Interest Payment Date.

SECTION 2.05. Interest on the Series 2012 Bonds. Interest on the Series 2012 Bonds will be computed in all cases on the basis of a 360 day year of twelve 30 day months. Interest on overdue principal and, to the extent lawful, on overdue interest will be payable at the numerical rate of interest borne by the Series 2012 Bonds on the day before the default occurred.

SECTION 2.06. Disposition of Series 2012 Bond Proceeds and Other Funds. From the net proceeds of the Series 2012 Bonds, being $20,552,159.35, and from certain moneys in the amount of $5,376,922.02 released under the Prior Indenture as a result of paying and defeasing the Prior Bonds (herein, the “Transferred Moneys”), the following deposits shall be made on the date of issuance of the Series 2012 Bonds:

(a) $19,447,095.68 derived from the proceeds of the Series 2012 Bonds and $4,330,854.32 derived from the Transferred Moneys shall be transferred to the Escrow Agent to be deposited and applied pursuant to the terms of the Escrow Deposit Agreement;

(b) $535,747.59 derived from the proceeds of the Series 2012 Bonds shall be deposited into the Series 2012A-1 Debt Service Reserve Account of the Debt Service Reserve Fund and $322,618.04 derived from the proceeds of the Series 2012 Bonds, shall be deposited into the Series 2012A-2 Debt Service Reserve Account of the Debt Service Reserve Fund;

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(c) $1,046,067.70 derived from the Transferred Moneys shall be deposited into the Debt Service Fund and applied to pay interest on the Series 2012 Bonds on November 1, 2012; and

(d) $246,698.04 derived from the proceeds of the Series 2012 Bonds shall be deposited into the Series 2012 Acquisition and Construction Account.

SECTION 2.07. Book-Entry Form of Series 2012 Bonds. The Series 2012 Bonds shall be issued as one fully registered bond per maturity of each Series and deposited with The Depository Trust Company, New York, New York (“DTC”), which is responsible for establishing and maintaining records of ownership for its participants.

The District and the Trustee shall enter into a letter of representations with DTC providing for such book-entry-only system, in accordance with the provisions of Section 2.11 of the Master Indenture. Such agreement may be terminated at any time by either DTC or the Issuer. In the event of such termination, the Issuer shall select another securities depository. If the Issuer does not replace DTC, the Trustee will register and deliver to the Beneficial Owners replacement Series 2012 Bonds in the form of fully registered Series 2012 Bonds in accordance with the instructions from Cede & Co.

SECTION 2.08. Appointment of Registrar and Paying Agent. The District shall keep, at the designated corporate trust office of the Registrar, books (the “Bond Register”) for the registration, transfer and exchange of the Series 2012 Bonds, and hereby appoints U. S. Bank National Association, as its Registrar to keep such books and make such registrations, transfers, and exchanges as required hereby. U. S. Bank National Association hereby accepts its appointment as Registrar and its duties and responsibilities as Registrar hereunder. Registrations, transfers and exchanges shall be without charge to the Bondholder requesting such registration, transfer or exchange, but such Bondholder shall pay any taxes or other governmental charges on all registrations, transfers and exchanges.

The District hereby appoints U. S. Bank National Association as Paying Agent for the Series 2012 Bonds. U. S. Bank National Association hereby accepts its appointment as Paying Agent and its duties and responsibilities as Paying Agent hereunder.

SECTION 2.09. Limitation on Additional Bonds and Other Indebtedness The District covenants and agrees that, so long as there are any Series 2012 Bonds Outstanding, it shall not cause or permit to be caused any lien, charge or claim against the Series 2012 Trust Estate. Except as set forth in the next succeeding sentence, the District further covenants and agrees that, so long as there are any Series 2012A-2 Bonds Outstanding and Accession shall not have occurred, it shall not incur additional indebtedness, whether in the form of bonds or otherwise, secured by assessments levied upon the same property that is subject to Special Assessments without the consent of the Holders of a majority in aggregate principal amount of the Series 2012A-2 Bonds at the time Outstanding. Notwithstanding the preceding sentence, the District: (i) may incur additional indebtedness on a parity basis with the Series 2012A-2 Bonds Outstanding for the purpose of effecting repairs to or replacements of property, facilities or equipment of the District; and (ii) may incur additional indebtedness on a basis subordinate to the Series 2012A-2 Bonds for any legal purpose.

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SECTION 2.10. Accession of Series 2012A-2 Bonds to Parity Status with Series 2012A-1 Bonds. The Series 2012A-2 Bonds shall accede to the status of complete parity with the Series 2012A-1 Bonds as to lien upon the Series 2012 Trust Estate upon satisfaction of the following conditions:

(a) The Issuer shall certify that it is current in all deposits into the various funds and accounts established under the Indenture, that it has made all payments required by the Indenture and that it is in compliance with all of its obligations under the Indenture;

(b) The Series 2012A-2 Debt Service Reserve Account shall contain an amount equal to the Series 2012A-2 Debt Service Reserve Requirement upon Accession; and

(c) The Issuer shall have received from written confirmation that, upon Accession, S&P shall rate the Series 2012A-1 Bonds and the Series 2012A-2 Bonds at the same rating as it rated the Series 2012A-1 Bonds prior to Accession.

Upon satisfaction of the above conditions, the Issuer shall cause the Trustee to provide written notice to the Owners of Accession. Such notice shall identify the rating borne by the Series 2012A-1 Bonds and the Series 2012A-2 Bonds upon Accession. Such notice shall advise the Owners of the Series 2012A-2 Bonds to surrender their Series 2012A-2 Bonds to the Trustee in exchange for new Series 2012A-2 Bonds, which new Series 2012A-2 Bonds shall be in substantially the form of the surrendered Series 2012A-2 Bonds, except that (i) they shall be modified as appropriate to indicate that they are on complete parity with the Series 2012A-1 Bonds as to lien upon the Series 2012 Trust Estate; and (ii) they shall bear new CUSIP numbers. The Issuer also shall file or cause to be filed a copy of such notice with the MSRB.

In connection with the potential Accession, the Issuer shall cooperate with the Holder or Holders of the Series 2012A-2 Bonds in the process of obtaining a rating on and new CUSIP numbers for the Series 2012A-2 Bonds, but the fees and costs attributable to obtaining such rating on and CUSIP numbers for the Series 2012A-2 Bonds shall be borne by the Holder or Holders of the Series 2012A-2 Bonds.

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ARTICLE III

REDEMPTION OF SERIES 2012 BONDS

SECTION 3.01. Redemption Dates and Prices. The Series 2012 Bonds shall be subject to redemption at the times and in the manner provided in Article VIII of the Master Indenture and in this Article III. All payments of the Redemption Price of the Series 2012 Bonds shall be made on the dates hereinafter required. Except as otherwise provided in this Section 3.01, if less than all of a Series is to be redeemed pursuant to an Extraordinary Mandatory Redemption, the Trustee shall select the Series 2012 Bonds of such Series or portions of the Series 2012 Bonds of such Series to be redeemed by lot. Partial redemptions of a Series shall be made in such a manner that the remaining Series 2012 Bonds of such Series held by each Bondholder shall be in Authorized Denominations, except for the last remaining Series 2012 Bond of such Series.

(a) Optional Redemption.

(i) The Series 2012A-1 Bonds may, at the option of the Issuer, be called for redemption prior to maturity as a whole or in part at any time on or after May 1, 2022 (less than all Series 2012A-1 Bonds to be selected in such manner as is specified by the Issuer in writing), at a Redemption Price equal to the principal amount of the Series 2012A-1 Bonds (or portion thereof to be redeemed) plus accrued interest from the most recent Interest Payment Date to the redemption date.

(ii) The Series 2012A-2 Bonds may, at the option of the Issuer, be called for redemption prior to maturity as a whole or in part at any time on or after May 1, 2022 (less than all Series 2012A-2 Bonds to be selected in such manner as is specified by the Issuer in writing), at a Redemption Price equal to the principal amount of the Series 2012A-2 Bonds (or portion thereof to be redeemed) plus accrued interest from the most recent Interest Payment Date to the redemption date.

(b) Extraordinary Mandatory Redemption in Whole or in Part.

(i) The Series 2012A-1 Bonds are subject to extraordinary mandatory redemption prior to maturity by the Issuer in whole or in part on any date at an extraordinary mandatory redemption price equal to 100% of the principal amount of the Series 2012A-1 Bonds to be redeemed, plus interest accrued to the redemption date, as follows:

(A) from Prepayments deposited into the General Redemption Account of the Series 2012 Bond Redemption Fund following the payment in whole or in part of Special Assessments on any portion of the District Lands in accordance with the provisions of Section 4.05 of this Second Supplemental Indenture;

(B) from moneys, if any, on deposit in the Series 2012A-1 Debt Service Reserve Account, together with other moneys available therefor, sufficient to pay and redeem all Series 2012A-1 Bonds Outstanding and accrued interest thereon to the redemption date;

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(C) from amounts on deposit in the Series 2012A-1 Debt Service Reserve Account in excess of the Series 2012A-1 Debt Service Reserve Requirement and transferred to the Series 2012A-1 Redemption Account of the Series 2012 Bond Redemption Fund in accordance with Section 6.05 of the Master Indenture and Section 4.01(f) of this Second Supplemental Indenture; and

(D) from Foreclosure Proceeds deposited into the General Redemption Account of the Series 2012 Bond Redemption Fund in accordance with the provisions of Section 4.04 of this Second Supplemental Indenture.

The redemption described in Section 3.01(b)(i)(A) above shall be on a pro rata basis with the Series 2012A-2 Bonds except, prior to Accession, during the continuance of an Event of Default there shall be no redemption of Series 2012A-2 Bonds, unless no Series 2012A-1 Bonds shall then be Outstanding. As used in the preceding sentence, “on a pro rata basis” means that the moneys available to be applied to satisfy the requirements of Section 3.01(b)(i)(A) above shall be applied in a manner such that the ratio of the principal amount of the Series 2012A-1 Bonds to be so redeemed bears to the principal amount of the Series 2012A-2 Bonds to be so redeemed is the same as the ratio of the outstanding principal balance of the Series 2012A-1 Bonds bears to the outstanding principal balance of the Series 2012A-2 Bonds.

(ii) The Series 2012A-2 Bonds are subject to extraordinary mandatory redemption prior to maturity by the Issuer in whole or in part, on any date at an extraordinary mandatory redemption price equal to 100% of the principal amount of the Series 2012A-2 Bonds to be redeemed, plus interest accrued to the redemption date, as follows:

(A) from Prepayments deposited into the General Redemption Account of Series 2012 Bond Redemption Fund following the payment in whole or in part of Special Assessments on any portion of the District Lands in accordance with the provisions of Section 4.05 of this Second Supplemental Indenture;

(B) from excess moneys transferred from the Series 2012 Revenue Account of the Revenue Fund to the Series 2012A-2 Redemption Account of the Series 2012 Bond Redemption Fund in accordance with Section 6.03 of the Master Indenture and Section 4.02 of this Second Supplemental Indenture; and

(C) from amounts on deposit in the Series 2012A-2 Debt Service Reserve Account in excess of the Series 2012A-2 Debt Service Reserve Requirement and transferred to the Series 2012A-2 Redemption Account of the Series 2012 Bond Redemption Fund in accordance with Section 6.05 of the Master Indenture and Section 4.01(f) of this Second Supplemental Indenture.

The redemption described in Section 3.01(b)(ii)(A) above shall be on a pro rata basis with the Series 2012A-1 Bonds except that no such redemption shall occur prior to Accession during the continuance of an Event of Default unless at the time no Series 2012A-1 Bonds shall be Outstanding. As used in the preceding sentence, “on a pro rata basis” means that the moneys available to be applied to satisfy the requirements of Section 3.01(b)(ii)(A) above shall be applied in a manner such that the ratio of the principal amount of the Series 2012A-1 Bonds to be

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so redeemed bears to the principal amount of the Series 2012A-2 Bonds to be so redeemed is the same as the ratio of the outstanding principal balance of the Series 2012A-1 Bonds bears to the outstanding principal balance of the Series 2012A-2 Bonds.

(c) Mandatory Sinking Fund Redemption. (i) The Series 2012A-1 Bonds maturing on May 1, 2027, are subject to mandatory

redemption in part by the Issuer prior to their scheduled maturity from moneys in the Series 2012A-1 Sinking Fund Account established under the Indenture in satisfaction of applicable Amortization Installments at the Redemption Price of 100% of the principal amount thereof, without premium, together with accrued interest to the date of redemption on May 1 of the years and in the principal amounts set forth below:

Year (May 1)

Principal Amount

2026 $790,000 2027* 825,000

____________ * Maturity.

(ii) The Series 2012A-1 Bonds maturing on May 1, 2031, are subject to mandatory redemption in part by the Issuer prior to their scheduled maturity from moneys in the Series 2012A-1 Sinking Fund Account established under the Indenture in satisfaction of applicable Amortization Installments at the Redemption Price of 100% of the principal amount thereof, without premium, together with accrued interest to the date of redemption on May 1 of the years and in the principal amounts set forth below:

Year (May 1)

Principal Amount

2028 $860,000 2029 900,000 2030 945,000

2031* 985,000 ____________ * Maturity.

(iii) The Series 2012A-2 Bonds maturing on May 1, 2021, are subject to mandatory redemption in part by the Issuer prior to their scheduled maturity from moneys in the Series 2012A-2 Sinking Fund Account established under the Indenture in satisfaction of applicable Amortization Installments at the Redemption Price of 100% of the principal amount thereof, without premium, together with accrued interest to the date of redemption on May 1 of the years and in the principal amounts set forth below:

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Year (May 1)

Principal Amount

2013 $235,000 2014 250,000 2015 265,000 2016 280,000 2017 300,000 2018 315,000 2019 335,000 2020 355,000

2021* 375,000 ____________ * Maturity.

(iv) The Series 2012A-2 Bonds maturing on May 1, 2031, are subject to mandatory redemption in part by the Issuer prior to their scheduled maturity from moneys in the Series 2012A-2 Sinking Fund Account established under the Indenture in satisfaction of applicable Amortization Installments at the Redemption Price of 100% of the principal amount thereof, without premium, together with accrued interest to the date of redemption on May 1 of the years and in the principal amounts set forth below:

Year (May 1)

Principal Amount

2022 $400,000 2023 420,000 2024 450,000 2025 475,000 2026 505,000 2027 535,000 2028 570,000 2029 605,000 2030 645,000

2031* 685,000 ____________ * Maturity.

SECTION 3.02. Notice of Redemption. When required to redeem Series 2012 Bonds under any provision of this Second Supplemental Indenture or directed to redeem Series 2012 Bonds by the Issuer, the Trustee shall give or cause to be given to Owners of the Series 2012 Bonds to be redeemed notice of the redemption, as set forth in Section 8.02 of the Master Indenture.

[End of Article III]

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ARTICLE IV

ESTABLISHMENT OF CERTAIN FUNDS AND ACCOUNTS; ADDITIONAL COVENANTS OF THE ISSUER; PREPAYMENTS; REMOVAL OF

SPECIAL ASSESSMENT LIENS

SECTION 4.01. Establishment of Certain Funds and Accounts.

(a) The Trustee shall establish a separate account within the Acquisition and Construction Fund designated as the “Series 2012 Acquisition and Construction Account”. Proceeds of the Series 2012 Bonds shall be deposited into the Series 2012 Acquisition and Construction Account in the amount set forth in Section 2.06 of this Second Supplemental Indenture, and such moneys in the Series 2012 Acquisition and Construction Account shall be applied to the payment of Costs of Issuance.

(b) Pursuant to Section 6.03 of the Master Indenture, the Trustee shall establish a separate account within the Revenue Fund designated as the “Series 2012 Revenue Account”. Special Assessments (except for Prepayments of Special Assessments which shall be deposited in the General Redemption Account of the Series 2012 Bond Redemption Fund) shall be deposited by the Trustee into the Series 2012 Revenue Account which shall be applied as set forth in Article VI of the Master Indenture and Section 4.02 of this Second Supplemental Indenture.

(c) Pursuant to Section 6.04 of the Master Indenture, the Trustee shall establish separate accounts within the Debt Service Fund designated as the “Series 2012A-1 Principal Account” and the “Series 2012A-2 Principal Account”. Moneys shall be deposited into the Series 2012A-1 Principal Account and Series 2012A-2 Principal Account as provided in Article VI of the Master Indenture and Section 4.02 of this Second Supplemental Indenture, and applied for the purposes provided therein.

(d) Pursuant to Section 6.04 of the Master Indenture, the Trustee shall establish separate accounts within the Debt Service Fund designated as the “Series 2012A-1 Interest Account” and the “Series 2012A-2 Interest Account”. Moneys deposited into the Series 2012A-1 Interest Account and the Series 2012A-2 Interest Account pursuant to the Master Indenture and Section 4.02 of this Second Supplemental Indenture, shall be applied for the purposes provided therein and as provided in this Section 4.01(d).

(e) Pursuant to Section 6.04 of the Master Indenture, the Trustee shall establish separate accounts within the Debt Service Fund designated as the “Series 2012A-1 Sinking Fund Account” and the “Series 2012A-2 Sinking Fund Account”. Moneys shall be deposited into the the Series 2012A-1 Sinking Fund Account and Series 2012A-2 Sinking Fund Account as provided in Article VI of the Master Indenture and applied for the purposes provided therein and in Section 3.01(c) of this Second Supplemental Indenture.

(f) Pursuant to Section 6.05 of the Master Indenture, the Trustee shall establish separate accounts within the Debt Service Reserve Fund designated as the “Series 2012A-1 Debt Service Reserve Account” and the “Series 2012A-2 Debt Service Reserve Account”. Proceeds

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of the Series 2012 Bonds shall be deposited into the Series 2012A-1 Debt Service Reserve Account and the Series 2012A-2 Debt Service Reserve Account in the amounts set forth in Section 2.06 of this Second Supplemental Indenture, and such moneys, together with any other moneys deposited into the Series 2012A-1 Debt Service Reserve Account and the Series 2012A-2 Debt Service Reserve Account pursuant to the Master Indenture, shall be applied for the purposes provided therein and in this Section 4.01(f).

(i) Amounts on deposit in the Series 2012A-1 Debt Service Reserve Account shall be used only for the purpose of making payments into the Series 2012A-1 Interest Account, and the Series 2012A-1 Sinking Fund Account to pay debt service on the Series 2012A-1 Bonds, when due, without distinction as to Series 2012A-1 Bonds and without privilege or priority of one Series 2012A-1 Bond over another, to the extent the moneys on deposit in the Series 2012A-1 Interest Account, and the Series 2012A-1 Sinking Fund Account and available therefor are insufficient and for no other purpose, except as specified in this Second Supplemental Indenture.

(ii) Except as provided below in this clause (ii), amounts on deposit in the Series 2012A-2 Debt Service Reserve Account shall be used only for the purpose of making payments into the Series 2012A-2 Interest Account, and the Series 2012A-2 Sinking Fund Account to pay Debt Service on the Series 2012A-2 Bonds, when due, without distinction as to Series 2012A-2 Bonds and without privilege or priority of one Series 2012A-2 Bond over another, to the extent the moneys on deposit in such Accounts therein and available therefor are insufficient; provided, however, that no such transfer shall be made unless the amount then on deposit in the Series 2012A-1 Interest Account and the Series 2012A-1 Sinking Fund Account sufficient to pay all of the debt service coming due on the Series 2012A-1 Bonds in the current Bond Year and the amount on deposit in the Series 2012A-1 Debt Service Reserve Account is equal to the Series 2012A-1 Debt Service Reserve Requirement. Unless Accession shall have occurred already, if at such time: (A) the amount then on deposit in the Series 2012A-1 Interest Account, the Series 2012A-1 Sinking Fund Account and the Series 2012A-1 Debt Service Reserve Account shall be insufficient to pay all of the debt service coming due on the Series 2012A-1 Bonds in the current Bond Year, amounts on deposit in the Series 2012A-2 Debt Service Reserve Account shall be used for the purpose of making payments into the Series 2012A-1 Interest Account, and the Series 2012A-1 Sinking Fund Account to pay Debt Service on the Series 2012A-1 Bonds, when due, without distinction as to Series 2012A-1 Bonds and without privilege or priority of one Series 2012A-1 Bond over another, to the extent of such insufficiency; or (B) the amount then on deposit in the Series 2012A-1 Interest Account and the Series 2012A-1 Sinking Fund Account shall be sufficient to pay all of the debt service coming due on the Series 2012A-1 Bonds in the current Bond Year, but the amount on deposit in the Series 2012A-1 Debt Service Reserve Account is less than the Series 2012A-1 Debt Service Reserve Requirement, amounts on deposit in the Series 2012A-2 Debt Service Reserve Account shall be transferred to the Series 2012A-1 Debt Service Reserve Account until the Series 2012A-1 Debt Service Reserve Requirement has been satisfied.

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(iii) Anything herein or in the Master Indenture to the contrary notwithstanding, on the forty-fifth (45th) day preceding each Redemption Date (or, if such forty-fifth (45th) day is not a Business Day, on the first Business Day preceding such forty-fifth (45th) day), the Trustee is hereby authorized and directed to recalculate the Series 2012A-1 Debt Service Reserve Requirement and to transfer any excess on deposit in the Series 2012A-1 Debt Service Reserve Account into the Series 2012A-1 Redemption Account of the Series 2012 Bond Redemption Fund and applied to the extraordinary mandatory redemption of the Series 2012A-1 Bonds.

(iv) On the earliest date on which there is on deposit in the Series 2012A-1 Debt Service Reserve Account, sufficient monies, after taking into account other monies available therefor, to pay and redeem all of the Outstanding Series 2012A-1 Bonds, together with accrued interest and redemption premium, if any, on such Series 2012A-1 Bonds to the earliest date of redemption permitted therein and herein, then the Trustee shall transfer the amount on deposit in the Series 2012A-1 Debt Service Reserve Account into the Series 2012A-1 Redemption Account in the Series 2012 Bond Redemption Fund to pay and redeem all of the Outstanding Series 2012A-1 Bonds on the earliest date permitted for redemption therein and herein.

(v) Anything herein or in the Master Indenture to the contrary notwithstanding, on the forty-fifth (45th) day preceding each Redemption Date (or, if such forty-fifth (45th) day is not a Business Day, on the first Business day preceding such forty-fifth (45th) day), the Trustee is hereby authorized and directed to recalculate the Series 2012A-2 Debt Service Reserve Requirement and to transfer any resulting excess on deposit in the Series 2012A-2 Debt Service Reserve Account into the Series 2012A-2 Redemption Account in the Series 2012 Bond Redemption Fund and applied to the extraordinary redemption of Series 2012A-2 Bonds; provided, however, that, unless and until such time as Accession shall have occurred, no such transfer shall be made unless the amount then on deposit in the Series 2012A-1 Interest Account, and the Series 2012A-1 Sinking Fund Account to pay Debt Service on the Series 2012A-1 Bonds are sufficient to pay all of the debt service coming due thereon in the current Bond Year and the amount on deposit in the Series 2012A-1 Debt Service Reserve Account is equal to the Series 2012A-1 Debt Service Reserve Requirement.

(vi) On the earliest date on which there is on deposit in the Series 2012A-2 Debt Service Reserve Account, sufficient monies, after taking into account other monies available therefor, to pay and redeem all of the Outstanding Series 2012A-2 Bonds, together with accrued interest and redemption premium, if any, on such Series 2012A-2 Bonds to the earliest date of redemption permitted therein and herein, then the Trustee shall transfer the amount on deposit in the Series 2012A-2 Debt Service Reserve Account into the Series 2012A-2 Redemption Account in the Series 2012 Bond Redemption Fund to pay and redeem all of the Outstanding Series 2012A-2 Bonds on the earliest date permitted for redemption therein and herein; provided, however, that, unless and until such time as Accession has occurred, no such transfer shall be made unless the amount then on deposit in the Series 2012A-1 Interest Account, and the Series 2012A-1 Sinking Fund Account to pay debt service on the Series 2012A-1 Bonds are sufficient to pay all

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of the debt service coming due thereon in the current Bond Year and the amount on deposit in the Series 2012A-1 Debt Service Reserve Account is equal to the Series 2012A-1 Debt Service Reserve Requirement.

(g) Pursuant to Section 6.06 of the Master Indenture, the Trustee shall establish a separate Series Bond Redemption Fund designated as the “Series 2012 Bond Redemption Fund” and therein a “Series 2012A-1 Bond Redemption Account,” a “Series 2012A-2 Bond Redemption Account” and a “General Redemption Account”. Moneys in the Accounts of the Series 2012 Bond Redemption Fund (including all earnings on investments held therein) shall be accumulated therein to be used in the following order of priority, to the extent that the need therefor arises:

FIRST, to make such deposits into the Series 2012 Rebate Fund, if any, as the Issuer may direct in accordance with an arbitrage rebate agreement, such moneys thereupon to be used solely for the purposes specified in said arbitrage rebate agreement. Any moneys so transferred, which shall be transferred first from the Series 2012A-2 Redemption Account, if those moneys are insufficient then from the Series 2012A-1 Bond Redemption Account and lastly from the General Redemption Account, from the Series 2012 Bond Redemption Fund to the Series 2012 Rebate Fund shall thereupon be free from the lien and pledge of the Indenture;

SECOND, to be used to call for redemption pursuant to the provisions of Section 3.01(b) hereof an amount of Series 2012A-1 Bonds and/or Series 2012A-2 Bonds equal to the amount of money transferred to the applicable Account or Accounts of the Series 2012 Bond Redemption Fund pursuant to the aforesaid clauses or provisions, as appropriate, for the purpose of such extraordinary mandatory redemption on the dates and at the prices provided in such clauses or provisions, as appropriate; and

THIRD, the remainder to be utilized by the Trustee, at the direction of a Responsible Officer, to call for redemption on each Interest Payment Date on which Series 2012 Bonds are subject to optional redemption pursuant to the provisions of Section 3.01(a) hereof such amount of Series 2012A-1 Bonds and/or Series 2012A-2 Bonds as directed by the Issuer as, with the redemption premium, may be practicable; provided, however, that not less than $5,000 principal amount of the applicable Series of Series 2012 Bonds shall be called for redemption at one time.

SECTION 4.02. Series 2012 Revenue Account.

(i) Unless and until such time as Accession has occurred, the Trustee shall transfer from amounts on deposit in the Series 2012 Revenue Account to the Funds and Accounts designated below, the following amounts, at the following times and in the following order of priority, except that, following application pursuant to clause FOURTH below, remaining Foreclosure Proceeds shall be applied pursuant to Section 3.01(b)(i)(D) and Section 4.04 to the redemption of Series 2012A-1 Bonds:

FIRST, no later than the Business Day preceding November 1, 2012, to be applied to the payment of interest on the Series 2012A-1 Bonds due on the next succeeding May 1 and November 1, and no later than the Business Day next preceding each May 1

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thereafter to the Series 2012A-1 Interest Account, an amount from the Series 2012 Revenue Account equal to the interest on the Series 2012A-1 Bonds becoming due on the next succeeding May 1 and November 1, less any amounts on deposit in the Series 2012A-1 Interest Account not previously credited;

SECOND, no later than the Business Day next preceding each stated maturity date of the Series 2012A-1 Bonds, to the Series 2012A-1 Principal Account, an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012A-1 Bonds Outstanding maturing on such May 1, if any, less any amounts on deposit in the Series 2012A-1 Principal Account not previously credited;

THIRD, no later than the Business Day next preceding each May 1, commencing May 1, 2026, to the Series 2012A-1 Sinking Fund Account, an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012A-1 Bonds subject to sinking fund redemption on such May 1, less any amount on deposit in the Series 2012A-1 Sinking Fund Account not previously credited;

FOURTH, no later than the Business Day next preceding each Interest Payment Date while Series 2012A-1 Bonds remain Outstanding, to the Series 2012A-1 Debt Service Reserve Account, an amount from the Series 2012 Revenue Account equal to the amount, if any, which is necessary to make the amount on deposit therein equal the Series 2012A-1 Debt Service Reserve Requirement;

FIFTH, no later than the Business Day preceding November 1, 2012, to be applied to the payment of interest on the Series 2012A-2 Bonds due on the next succeeding May 1 and November 1, and no later than the Business Day next preceding each May 1 thereafter to the Series 2012A-2 Interest Account, an amount from the Series 2012 Revenue Account equal to the interest on the Series 2012A-2 Bonds becoming due on the next succeeding May 1 and November 1, less any amounts on deposit in the Series 2012A-2 Interest Account not previously credited;

SIXTH, no later than the Business Day next preceding each stated maturity date of the Series 2012A-2 Bonds, to the Series 2012A-2 Principal Account, an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012A-2 Bonds Outstanding maturing on such May 1, if any, less any amounts on deposit in the Series 2012A-2 Principal Account not previously credited;

SEVENTH, no later than the Business Day next preceding each May 1, commencing May 1, 2013, to the Series 2012A-2 Sinking Fund Account, an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012A-2 Bonds subject to sinking fund redemption on such May 1, less any amount on deposit in the Series 2012A-2 Sinking Fund Account not previously credited;

EIGHTH, upon receipt but no later than the Business Day next preceding each Interest Payment Date while Series 2012A-2 Bonds remain Outstanding, to the Series 2012A-2 Debt Service Reserve Account, an amount from the Series 2012 Revenue

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Account equal to the amount, if any, which is necessary to make the amount on deposit therein equal the Series 2012A-2 Debt Service Reserve Requirement; and

NINTH, subject to the following paragraph, the balance of any moneys remaining after making the foregoing deposits shall remain therein.

On each November 2 of each calendar year, the Trustee shall withdraw any moneys held for the credit of the Series 2012 Revenue Account which are not otherwise required to be deposited pursuant to this Section and deposit such moneys to the credit of the Series 2012 Bond Redemption Fund for the redemption of the Series 2012A-2 Bonds in accordance with Section 3.01(b)(ii)(B).

(ii) After Accession has occurred, the Trustee shall transfer from amounts on deposit in the Series 2012 Revenue Account to the Funds and Accounts designated below, the following amounts, at the following times and in the following order of priority:

FIRST, no later than the Business Day preceding November 1, 2012, to be applied to the payment of interest on the Series 2012 Bonds due on the next succeeding May 1 and November 1, and no later than the Business Day next preceding each May 1 thereafter to the Series 2012A-1 Interest Account and the Series 2012A-2 Interest Account an amount from the Series 2012 Revenue Account equal to the interest on the Series 2012 Bonds becoming due on the next succeeding May 1 and November 1, less any amounts on deposit in the Series 2012A-1 Interest Account and the Series 2012A-2 Interest Account, as the case may be, not previously credited;

SECOND, no later than the Business Day next preceding each stated maturity of the Series 2012 Bonds, to the Series 2012A-1 Principal Account and the Series 2012A-2 Principal Account an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012 Bonds Outstanding maturing on such May 1, if any, less any amounts on deposit in the Series 2012A-1 Principal Account and the Series 2012 B Principal Account, as the case may be, not previously credited;

THIRD, no later than the Business Day next preceding each May 1, commencing on the date the next sinking fund installment on the Series 2012 Bonds shall be due and payable, to the Series 2012A-1 Sinking Fund Account and the Series 2012A-2 Sinking Fund Account an amount from the Series 2012 Revenue Account equal to the principal amount of Series 2012 Bonds subject to sinking fund redemption on such May 1, less any amount on deposit in the Series 2012A-1 Sinking Fund Account and the Series 2012A-2 Sinking Fund Account, as the case may be, not previously credited;

FOURTH, no later than the Business Day next preceding each Interest Payment Date while Series 2012 Bonds remain Outstanding, to the Series 2012A-1 Debt Service Reserve Account and the Series 2012A-2 Debt Service Reserve Account an amount from the Series 2012 Revenue Account equal to the amount, if any, which is necessary to make the amount on deposit in the Series 2012A-1 Debt Service Reserve Account equal the Series 2012A-1 Debt Service Reserve Requirement and the amount on deposit in the

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Series 2012A-2 Debt Service Reserve Account equal the Series 2012A-2 Debt Service Reserve Requirement; and

FIFTH, subject to the following paragraph the balance of any moneys remaining after making the foregoing deposits shall remain therein.

In the event that the amounts to be applied pursuant to clauses FIRST through FOURTH of this Section 4.02(ii) shall be insufficient to satisfy the requirements of any such clause, the moneys available to be applied to satisfy the requirements of such clause shall be applied in a manner such that each of the respective accounts for the Series 2012A-1 Bonds and the Series 2012A-2 Bonds mentioned in such clause receives the same percentage of the requirement for such account as the percentage of moneys available to be applied to satisfy the requirements of such clause bears to the combined funding requirements for the accounts mentioned in such clause.

SECTION 4.03. Power to Issue Series 2012 Bonds and Create Lien. The District is duly authorized under the Act and all applicable laws of the State to issue the Series 2012 Bonds, to execute and deliver the Indenture and to pledge the Pledged Revenues for the benefit of the Series 2012 Bonds to the extent set forth herein. The Pledged Revenues are not and shall not be subject to any other lien senior to or on a parity with the lien created in favor of the Series 2012 Bonds, except as otherwise permitted under the Master Indenture. The Series 2012 Bonds and the provisions of the Indenture are and will be valid and legally enforceable obligations of the Issuer in accordance with their respective terms. The District shall, at all times, to the extent permitted by law, defend, preserve and protect the pledge created by the Indenture and all the rights of the Owners of the Series 2012 Bonds under the Indenture against all claims and demands of all persons whomsoever.

SECTION 4.04. Foreclosure Proceeds. The Issuer shall remit to the Trustee any and all Foreclosure Proceeds as soon as practicable after receipt. Prior to Accession and so long as the Series 2012A-1 Bonds remain Outstanding, the Trustee shall transfer all Foreclosure Proceeds received pursuant to the first paragraph of Section 4.02(i) above to the Series 2012 Bond Redemption Fund for the redemption of Series 2012A-1 Bonds pursuant to Section 3.01(b)(i)(D).

SECTION 4.05. Prepayments; Removal of Special Assessment Liens. (a) At any time any owner of property subject to the Special Assessments may, at its option, or under certain circumstances described in the Assessment Resolution in connection with Prepayments derived from application of the “true-up” mechanism therein, shall, require the Issuer to reduce or release and extinguish the lien upon its property by virtue of the levy of the Special Assessments by paying to the Issuer all or a portion of the Special Assessment, which shall constitute Series 2012 Prepayment Principal plus accrued interest to the next succeeding Interest Payment Date (or the second succeeding Interest Payment Date if such prepayment is made within 45 calendar days before an Interest Payment Date), attributable to the property subject to Special Assessment owned by such owner.

(b) Upon receipt of Prepayments as described in paragraph (a) above, subject to satisfaction of the conditions set forth therein, the Issuer shall immediately pay the amount so

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received to the Trustee, and the Issuer shall take such action as is necessary to record in the official records of the County an affidavit or affidavits, as the case may be, executed by the Issuer Manager, to the effect that the Special Assessment has been paid in whole or in part and that such Special Assessment lien is thereby reduced, or released and extinguished, as the case may be. Upon receipt of any such moneys from the Issuer the Trustee shall immediately deposit the same into the General Redemption Account of the Series 2012 Bond Redemption Fund to be applied in accordance with Section 3.01(b)(i) and (ii) of this Second Supplemental Indenture, to the redemption of Series 2012 Bonds in accordance with Section 4.01(g) of this Second Supplemental Indenture.

[End of Article IV]

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ARTICLE V

MISCELLANEOUS PROVISIONS

SECTION 5.01. Interpretation of Supplemental Indenture. This Second Supplemental Indenture amends and supplements the Master Indenture with respect to the Series 2012 Bonds, and all of the provisions of the Master Indenture, to the extent not inconsistent herewith, are incorporated in this Second Supplemental Indenture by reference. To the maximum extent possible, the Master Indenture and the Supplemental Indenture shall be read and construed as one document.

SECTION 5.02. Limitations on Rights and Remedies of Owners of Series 2012A-2 Bonds. Anything herein or in the Master Indenture to the contrary notwithstanding, so long as the Series 2012A-1 Bonds are Outstanding and unless and until Accession shall have occurred:

(a) the Owners of the Series 2012A-2 Bonds shall have a subordinate and inferior lien to the lien on the Series 2012 Trust Estate, subject to the first and prior lien thereon in favor of the Owners of the Series 2012A-1 Bonds;

(b) the Owners of the Series 2012A-2 Bonds shall have no rights whatsoever to direct or control remedies upon the occurrence and continuance of any default or Event of Default, nor shall the Owners of the Series 2012A-2 Bonds have any right to sit on or participate in any Bondholder or similar committee, nor shall such Owners have the right to vote nor be counted as Owners for the purpose of the exercise of remedial provisions of the Indenture or for the purpose of consents to any amendments of the Indenture, except for amendments which would materially adversely affect the rights of such Owners of the Series 2012A-2 Bonds. Owners of the Series 2012A-2 Bonds shall, however, have the right, and shall be limited to the right, to enforce the provisions of the Indenture as it relates to the deposit and disposition of amounts on deposit or to be deposited into the Funds and Accounts held for the benefit of the Owners of the Series 2012A-2 Bonds and may enforce such rights by mandamus, injunction or other equitable remedies. After Accession shall have occurred, the Owners of the Series 2012A-2 Bonds shall have the same consent, enforcement and other rights under the Indenture as the Owners of the Series 2012A-1 Bonds; and

(c) the Trustee shall have no fiduciary duty to the Owners of the Series 2012A-2 Bonds except to enforce the provisions of the Indenture as it relates to the deposit and disposition of amounts on deposit or to be deposited into the Funds and Accounts held for the benefit of the Owners of the Series 2012A-2 Bonds. Accession shall not impose retroactively any additional fiduciary duty upon the Trustee to the Owners of the Series 2012A-2 Bonds prior to Accession.

SECTION 5.03. Covenant with Regard to Enforcement and Collection of Delinquent Special Assessments. Anything herein or in the Master Indenture to the contrary notwithstanding, the Issuer covenants and agrees that upon the occurrence and continuance of an Event of Default, it will take such actions to enforce the remedial provisions of the Indenture, the provisions for the collection of delinquent Special Assessments, the provisions for the

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foreclosure of liens of delinquent Special Assessments and will take such other appropriate remedial actions as shall be directed by the Trustee acting at the direction of, and on behalf of, the Owners of a majority in principal amount, from time to time, of the Series 2012A-1 Bonds, and, after Accession shall have occurred, of the Series 2012 Bonds.

SECTION 5.04. Additional Covenants Regarding Assessments. In addition to, and not in limitation of, the covenants contained elsewhere in this Second Supplemental Indenture and in the Master Indenture, the Issuer covenants to comply with the terms of the proceedings heretofore adopted with respect to the Special Assessment, including the Report, and to levy the Special Assessments and any required true-up payments set forth in the Report, in accordance with such proceedings and in such manner as will generate funds sufficient to pay the principal of and interest on the Series 2012 Bonds, when due. The Report shall not be amended in a manner that will or is likely to have a material adverse effect on the interests of the holders of the Series 2012A-1 Bonds without the written consent of the Holders of a majority in aggregate principal amount of the Series 2012A-1 Bonds. The Report shall not be amended in a manner that will or is likely to have a material adverse effect on the interests of the holders of the Series 2012A-2 Bonds without the written consent of the Holders of a majority in aggregate principal amount of the Series 2012A-2 Bonds.

The District further covenants and agrees that so long as any Series 2012A-2 Bonds are Outstanding, it will not reduce any annual installment for the Special Assessment on any tax parcel from that set forth in the Report on account of any reduction in Debt Service on the Series 2012 Bonds resulting from a redemption of Series 2012A-2 Bonds in accordance with Section 3.01(b)(ii)(B).

SECTION 5.05. Amendments. Any amendments to this Second Supplemental Indenture shall be made pursuant to the provisions for amendment contained in the Master Indenture, except that prior to Accession, amendments requiring Bondholder approval under the Master Indenture shall only require the approval of the Owners of a majority in principal amount of the Series 2012A-1 Bonds.

SECTION 5.06. Collection of Direct Billed Special Assessments. The Issuer shall directly bill and collect the Special Assessments such that, commencing December 1, 2012, fifty percent (50%) of each annual assessment shall be payable on December 1, with the remaining fifty percent (50%) payable on the next succeeding April 1; provided, however, that the Issuer, in its discretion, may require in any Fiscal Year that the second 50% may instead be payable in two installments of twenty-five percent (25%) each, with the last such installment to be payable not later than April 1 of such Fiscal Year.

SECTION 5.07. Counterparts. This Second Supplemental Indenture may be executed in any number of counterparts, each of which when so executed and delivered shall be an original; but such counterparts shall together constitute but one and the same instrument.

SECTION 5.08. Appendices and Exhibits. Any and all schedules, appendices or exhibits referred to in and attached to this Second Supplemental Indenture are hereby incorporated herein and made a part of this Second Supplemental Indenture for all purposes.

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SECTION 5.09. Payment Dates. In any case in which an Interest Payment Date or the maturity date of the Series 2012 Bonds or the date fixed for the redemption of any Series 2012 Bonds shall be other than a Business Day, then payment of interest, principal or Redemption Price need not be made on such date but may be made on the next succeeding Business Day, with the same force and effect as if made on the due date, and no interest on such payment shall accrue for the period after such due date if payment is made on such next succeeding Business Day.

SECTION 5.10. No Rights Conferred on Others. Nothing herein contained shall confer any right upon any Person other than the parties hereto and the Holders of the Series 2012 Bonds.

SECTION 5.11. [RESERVED].

SECTION 5.12. Collection of Special Assessments. Anything in this Second Supplemental Indenture or in the Master Indenture to the contrary notwithstanding but subject to the sentence immediately succeeding, Special Assessments levied on platted lots and pledged hereunder to secure the Series 2012 Bonds shall be collected pursuant to the uniform method for the collection of special assessments set forth in the Act (the “Uniform Method”). To the extent the Issuer is not able to collect such Special Assessments pursuant to the Uniform Method, the Issuer may elect to collect and enforce such Special Assessments pursuant to any then available and commercially reasonable method under the Act, Chapter 170, Florida Statutes, Chapter 197, Florida Statutes, or any successor statutes thereto.

Special Assessments levied on unplatted lots and pledged hereunder to secure the Series 2012 Bonds shall be collected directly by the Issuer pursuant to the Act and the procedures Chapters 170 and 197, Florida Statutes, and not pursuant to the Uniform Method, in each case unless otherwise directed by the Trustee acting at the direction of, prior to Accession, the Holders of a majority in aggregate principal amount of the Series 2012A-1 Bonds and, after Accession has occurred, the Holders of a majority in combined aggregate principal amount of the Series 2012 Bonds.

SECTION 5.13. Additional Events of Default and Remedies. Section 10.02 of the Master Indenture is hereby amended with respect to the Series 2012 Bonds by inserting at the conclusion thereof the following paragraphs:

“(g) Prior to Accession, any portion of the Special Assessments shall have become delinquent, as described in Section 9.05 of the Master Indenture, and the terms of the Indenture require the Trustee to withdraw funds from the Series 2012A-1 Debt Service Reserve Account or the Series 2012A-2 Debt Service Reserve Account to pay debt service on the Series 2012A-1 Bonds (regardless of whether the Trustee does or does not, per the direction of the Holders of a majority in aggregate principal amount of the Series 2012A-1 Bonds, actually withdraw such funds from the Series 2012A-1 Debt Service Reserve Account or the Series 2012A-2 Debt Service Reserve Account to pay debt service on the Series 2012A-1 Bonds); and

(h) After Accession shall have occurred, any portion of the Special Assessments shall have become delinquent, as described in Section 9.05 of the Master Indenture, and the terms of

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the Indenture require the Trustee to withdraw funds from the Series 2012A-1 Debt Service Reserve Account and the Series 2012A-2 Debt Service Reserve Account to pay debt service on the Series 2012A-1 Bonds and the Series 2012A-2 Bonds, respectively (regardless of whether the Trustee does or does not, per the direction of the Holders of a majority in aggregate principal amount of the Series 2012A Bonds, actually withdraw such funds from the Series 2012A-1 Debt Service Reserve Account and the Series 2012A-2 Debt Service Reserve Account to pay debt service on the Series 2012A-1 Bonds and the Series 2012A-2 Bonds, respectively).

Section 10.07 of the Master Indenture is hereby amended with respect to the Series 2012 Bonds by inserting at the conclusion thereof the following paragraph:

“The Issuer covenants and agrees that, upon the occurrence and continuance of an Event of Default, it will take such actions to enforce the remedial provisions of the Indenture, the provisions for the collection of delinquent Special Assessments, and the provisions for the foreclosure of liens of Delinquent Assessments, and will take such other appropriate remedial actions as shall be directed by the Trustee acting at the direction of, and on behalf of, the Holders of a majority in aggregate principal amount, from time to time, of the Series 2012A-1 Bonds and, after Accession shall have occurred, of the Series 2012 Bonds. Notwithstanding anything to the contrary herein and, unless otherwise directed by the Holders of a majority in aggregate principal amount, from time to time, of the Series 2012A-1 Bonds and, after Accession shall have occurred, of the Series 2012 Bonds, to the extent allowed pursuant to Federal or State law, the Issuer acknowledges and agrees that (i) upon failure of any property owner to pay Special Assessments collected directly by the Issuer when due, that the entire Special Assessments, with interest and penalties thereon, shall immediately become due and payable and the Issuer shall promptly, but in any event within ninety (90) days, cause to be commenced the necessary legal proceedings from the foreclosure of liens of delinquent Special Assessments, including interest and penalties and (ii) the foreclosure proceedings shall be prosecuted to a sale and conveyance of the property involved in said proceedings as may then be provided by law in suits to foreclose mortgages.”

SECTION 5.14. Provisions Relating to Bankruptcy or Insolvency of Landowner. The provisions of this Section 5.14 shall apply both before and after the commencement, whether voluntary or involuntary, or any case, proceeding or other action by or against any owner of any tax parcel subject to the Special Assessments (an “Insolvent Taxpayer”) under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization, assignment for the benefit of creditors, or relief of debtors (a “Proceeding”), except where such tax parcel shall be homestead property. For as long as any Series 2012 Bonds remain outstanding, in any Proceeding involving the Issuer, any Insolvent Taxpayer, the Series 2012 Bonds or the Special Assessments, the Issuer shall be obligated to act in accordance with direction from the Trustee with regard to all matters directly or indirectly affecting the Series 2012 Bonds or for as long as any of the Series 2012 Bonds remain Outstanding. The Issuer agrees that it shall not be a defense to a breach of the foregoing covenant that it has acted upon advice of counsel in not complying with this covenant.

The Issuer acknowledges and agrees that, although the Series 2012 Bonds were issued by the Issuer, the Holders of the Series 2012 Bonds are categorically a party with a financial stake in

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the transaction and, consequently, a party with a vested interest in a Proceeding. In the event of any Proceeding involving any Insolvent Taxpayer:

(a) the Issuer hereby agrees that it shall not make any election, give any consent, commence any action or file any motion, claim, obligation, notice or application or take any other action or position in any Proceeding or in any action related to a Proceeding that affects, either directly or indirectly, the Special Assessments, the Series 2012 Bonds or any rights of the Trustee under the Indenture that is inconsistent with any direction from the Trustee;

(b) the Trustee shall have the right, but is not obligated to, vote in any such Proceeding any and all claims of the Issuer, and, if the Trustee chooses to exercise such right, the Issuer shall be deemed to have appointed the Trustee as its agent and granted to the Trustee an irrevocable power of attorney coupled with an interest, and its proxy, for the purpose of exercising any and all rights and taking any and all actions available to the Issuer in connection with any Proceeding of any Insolvent Taxpayer, including without limitation, the right to file and/or prosecute any claims, to vote to accept or reject a plan, and to make any election under Section 1111(b) of the United States Bankruptcy Code; and

(c) the Issuer shall not challenge the validity or amount of any claim submitted in such Proceeding by the Trustee in good faith or any valuations of the lands owned by any Insolvent Taxpayer submitted by the Trustee in good faith in such Proceeding or take any other action in such Proceeding, which is adverse to the Trustee’s enforcement of the Issuer claim with respect to the Special Assessments or receipt of adequate protection (as that term is defined in the United States Bankruptcy Code).

Without limiting the generality of the foregoing, the Issuer agrees that the Trustee shall have the right (i) to file a proof of claim with respect to the Special Assessments and the Completion Agreement, (ii) to deliver to the Issuer a copy thereof, together with evidence of the filing with the appropriate court or other authority, and (iii) to defend any objection filed to said proof of claim.

Nothing in this Section 5.14 shall preclude the Issuer from becoming a party to a Proceeding in order to enforce a claim for operation and maintenance assessments, and the Issuer shall be free to pursue such a claim in such manner as it shall deem appropriate in its sole and absolute discretion.

SECTION 5.15. Foreclosing of Special Assessment Lien. Notwithstanding Section 9.01 of the Master Indenture or any other provision of the Indenture to the contrary, the following provisions shall apply with respect to the Special Assessments and Series 2012 Bonds.

If any property shall be offered for sale for the nonpayment of any Series 2012 Assessment and no person or persons shall purchase such property for an amount equal to the full amount due on the Special Assessments (principal, interest, penalties and costs, plus attorneys’ fees, if any), the property may then be purchased by the Issuer for an amount equal to the balance due on the Special Assessments (principal, interest, penalties and costs, plus

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attorneys’ fees, if any), from any legally available funds of the Issuer and the Issuer shall receive the property in its corporate name or in the name of a special purpose entity title to the property for the benefit of the Owners of the Series 2012 Bonds; provided that the Trustee shall have the right, acting at the direction of the Holders of a majority in aggregate principal amount, from time to time, of the Series 2012A-1 Bonds and, after Accession shall have occurred, of the Series 2012 Bonds, but shall not be obligated, to direct the Issuer with respect to any action taken pursuant to this Section. The Issuer, either through its own action, or actions caused to be taken through the Trustee, shall have the power and shall lease or sell such property, and deposit all of the net proceeds of any such lease or sale into the Series 2012 Revenue Account. The Issuer, either through its own actions, or actions caused to be taken through the Trustee, agrees that it shall, after being provided with assurances satisfactory to it of payment of its fees, costs and expenses for doing so, be required to take the measures provided by law for sale of property acquired by it as trustee for the Owners of the Series 2012 Bonds within thirty (30) days after the receipt of the request therefore signed by the Trustee or the Holders of a majority in aggregate principal amount, from time to time, of the Series 2012A-1 Bonds and, after Accession shall have occurred, of the Series 2012 Bonds. The Trustee may, upon direction from the Holders of a majority in aggregate principal amount of the Series 2012A-1 Bonds, and after Accession, of the Series 2012 Bonds, pay costs associated with any actions taken by Issuer pursuant to this paragraph from any moneys legally available for such purpose held under the Indenture.

SECTION 5.16. Critical Personnel. Notwithstanding anything to the Indenture to the contrary, the Issuer covenants and agrees for the benefit of the Holders from time to time of the Series 2012 Bonds, that, except upon a finding by the Board of Supervisors of the Issuer of gross negligence, malfeasance or misfeasance, it will not without the consent of the the Holders of a majority in aggregate principal amount, from time to time, of the Series 2012A-1 Bonds and, after Accession shall have occurred, of the Series 2012 Bonds, remove or replace Issuer counsel, the Issuer manager, the tax roll or methodology consultant, or the Trustee.

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182,329,738 037766010300

IN WITNESS WHEREOF, Poinciana Community Development District has caused this Second Supplemental Trust Indenture to be executed by the Chairman of its Board of Supervisors and its corporate seal to be hereunto affixed and attested by the Secretary of its Board of Supervisors and U. S. Bank National Association has caused this Second Supplemental Trust Indenture to be executed by one of its Vice Presidents, all as of the day and year first above written.

POINCIANA COMMUNITY DEVELOPMENT DISTRICT

[SEAL] Attest: By: __________________

Robert Zimbardi Chairman Board of Supervisors

_______________________________ Secretary/Assistant Secretary Board of Supervisors

U. S. BANK NATIONAL ASSOCIATION, as Trustee, Paying Agent and Registrar

By:

Name: Cristina Fleitas Title: Vice President

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182,329,738 037766010300

STATE OF FLORIDA ) ) SS: COUNTY OF POLK )

On this 18th day of April, 2012, before me, a notary public in and for the State and County aforesaid, personally appeared Robert Zimbardi and ________________, Chairman and Assistant Secretary, respectively, of POINCIANA COMMUNITY DEVELOPMENT DISTRICT (the “Issuer”), who acknowledged that they did so sign the foregoing instrument as such officers, respectively, for and on behalf of said Issuer; that the same is their free act and deed as such officers, respectively, and the free act and deed of said Issuer; and that the seal affixed to said instrument is the seal of said Issuer; that they respectively appeared before me this day in person and severally acknowledged that they, being thereunto duly authorized, signed, sealed with the seal of said District, for the uses and purposes therein set forth.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written.

NOTARY PUBLIC, STATE OF FLORIDA (Name of Notary Public, Print, Stamp or Type as Commissioned)

1 Personally known to me, or 2 Produced identification:

(Type of Identification Produced)

3 DID take an oath, or 4 DID NOT take an oath.

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182,329,738 037766010300

STATE OF FLORIDA ) ) SS:

COUNTY OF ORANGE )

On this 18th day of April, 2012, before me, a notary public in and for the State and County aforesaid, personally appeared Cristina Fleitas, a Vice President of U. S. BANK NATIONAL ASSOCIATION, as Trustee, who acknowledged that she did so sign said instrument as such officer for and on behalf of said corporation; that the same is her free act and deed as such officer, respectively, and the free act and deed of said corporation; that she appeared before me on this day in person and acknowledged that she, being thereunto duly authorized, signed on behalf of said corporation for the uses and purposes therein set forth.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written.

NOTARY PUBLIC, STATE OF FLORIDA (Name of Notary Public, Print, Stamp or Type as Commissioned)

5 Personally known to me, or 6 Produced identification:

(Type of Identification Produced)

7 DID take an oath, or 8 DID NOT take an oath.

182,329,738 037766010300

EXHIBIT A

FORM OF SERIES 2012A-1 BOND

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EXHIBIT B FORM OF SERIES 2012A-2 BOND

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Appendix C

Form of Opinion of Bond Counsel

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Board of Supervisors of Poinciana Community Development District

Celebration, Florida

U.S. Bank National Association, as Trustee Orlando, Florida

Re: $13,285,000 original aggregate principal amount of Poinciana Community Development District Senior Special Assessment Refunding Bonds, Series 2012A-1, and $8,000,000 original aggregate principal amount of Poinciana Community Development District Subordinate Special Assessment Refunding Bonds, Series 2012A-2

Ladies and Gentlemen:

We have served as Bond Counsel in connection with the issuance by the Poinciana Community Development District (the “District”) of $13,285,000 original aggregate principal amount of its Poinciana Community Development District Senior Special Assessment Refunding Bonds, Series 2012A-1 (the “2012A-1 Bonds”) and $8,000,000 original aggregate principal amount of its Poinciana Community Development District Subordinate Special Assessment Refunding Bonds, Series 2012A-2 (the “2012A-2 Bonds” and, together with the 2012A-1 Bonds, the “2012A Bonds”) issued and delivered on this date pursuant to the Constitution and laws of the State of Florida, particularly, the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended, and other applicable provisions of law (collectively, the “Act”) and Resolutions adopted by the Board of Supervisors of the District on November 18, 1999 and March 21, 2012 (collectively, the “Resolution”). The 2012A Bonds are being issued under and secured by a Master Trust Indenture dated as of April 1, 2000 (the “Trust Indenture”), as supplemented and amended by a Second Supplemental Trust Indenture dated as of April 1, 2012 (the “Second Supplemental Indenture” and collectively with the Trust Indenture, the “Indenture”) each between the District and U.S. Bank National Association (successor in trust to First Union National Bank), as trustee (the “Trustee”). Capitalized terms used, but not defined, herein shall have the meanings assigned thereto in the Indenture.

The 2012A Bonds are being issued for the purposes of, together with other available moneys, providing funds for: (i) current refunding the District’s $27,315,000 original aggregate principal amount of Poinciana Community Development District Special Assessment Bonds, Series 2000A (the “Prior Bonds”), currently outstanding in the aggregate principal amount of $22,960,000, (ii) funding the Series 2012A-1 Debt Service Reserve Requirement and the Series 2012A-2 Debt Service Reserve Requirement, and (iii) paying certain costs of issuing the 2012A Bonds

In order to secure the payment of the 2012A Bonds, and subject to the terms of the Indenture, the District has pledged to the holders of the 2012A Bonds, and granted a lien to the holders of the 2012A Bonds on the Series 2012 Trust Estate, provided, however, that, unless and until such time as Accession

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has occurred, the lien and pledge of the Series 2012 Trust Estate to the Series 2012A-2 Bonds shall as provided in the Indenture be subordinate and inferior to the lien and pledge thereof to the Series 2012A-1 Bonds, including, but not limited to, the rights to payment and enforcement of rights and remedies under the Indenture.

In connection with this opinion, we have examined the Act, certified copies of the Resolution, the Indenture, the Arbitrage Certificate, a transcript of the proceedings related to the issuance of the 2012A Bonds and such other documents and opinions as we have deemed necessary to render this opinion, and are relying on certain findings, covenants and agreements of the District set forth therein and such certified copies of the proceedings of the District and such other documents and opinions as we have deemed necessary to render this opinion. As to the questions of fact material to our opinion, we have relied upon representations of the District furnished to us, without undertaking to verify such representations by independent investigation. In addition, we have examined and relied upon the opinion of Hopping Green & Sams, counsel to the District.

In connection with the execution and delivery of the 2012A Bonds, in our capacity as Bond Counsel, we have been requested to render the opinions contained in this letter. The opinions set forth below are expressly limited to, and we opine only with respect to, the laws of the State of Florida and the federal income tax laws of the United States of America.

Based upon the foregoing, and subject to the qualifications and limitations stated in this letter, we are of the opinion that:

1. The District has the power to authorize, execute and deliver the Indenture, to perform its obligations thereunder and to issue the 2012A Bonds.

2. The Indenture has been duly authorized, executed and delivered by the District and, assuming the due authorization, execution and delivery thereof by the Trustee, constitutes a valid and binding obligation of the District enforceable against the District in accordance with its terms.

3. The issuance and sale of the 2012A Bonds has been duly authorized by the District. The 2012A Bonds have been duly executed by the District and, assuming the due authentication thereof, the 2012A Bonds constitute valid and binding limited obligations of the District, payable in accordance with, and as limited by, the terms of the Indenture.

4. Assuming the accuracy of certain representations and certifications of the District, under existing statutes, regulations, rulings and court decisions, the interest on the 2012A Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. However, interest on the 2012A Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. Ownership of the 2012A Bonds may result in collateral federal tax consequences to certain taxpayers. We express no opinion regarding such federal tax consequences arising with respect to the 2012A Bonds.

In rendering the opinion in the preceding paragraph, we have assumed continuing compliance by the District with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”) that must be met after the issuance of the 2012A Bonds in order that interest on the 2012A Bonds be, and continue to be, excludable from gross income for federal income tax purposes. The failure of the District to meet these requirements may cause interest on the 2012A Bonds to be included in gross income for

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federal income tax purposes retroactively to their date of issuance. The District has covenanted to take the actions required by the Code in order to maintain the excludability from gross income for federal income tax purposes of interest on the 2012A Bonds.

5. The 2012A Bonds are not subject to taxation under the laws of the State, except estate taxes and taxes under Chapter 220, Florida Statutes, as amended, on interest, income or profits on debt obligations owned by corporations as defined therein.

Except as stated in paragraphs 4 and 5 above, we express no opinion as to any other tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of the 2012A Bonds.

In rendering the foregoing opinions we have assumed the accuracy and truthfulness of all public records and of all certifications, documents and other proceedings examined by us that have been executed or certified by public officials acting within the scope of their official capacities and have not verified the accuracy or truthfulness thereof. We have also assumed the genuineness of the signatures appearing upon such public records, certifications, documents and proceedings.

This opinion is qualified to the extent that the enforceability of the 2012A Bonds and the Indenture, respectively, may be limited by general principles of equity which may permit the exercise of judicial discretion, and by bankruptcy, insolvency, moratorium, reorganization or similar laws relating to the enforcement of creditors’ rights generally, now or hereafter in effect.

We wish to call to your attention that the 2012A Bonds are limited obligations of the District payable solely out of the Pledged Revenues and the Series 2012 Trust Estate as provided in the Indenture, and neither the full faith and credit nor the taxing power of the District, Polk County, Florida, the State of Florida or any other political subdivision or agency thereof is pledged as security for the payment of the 2012A Bonds. The 2012A Bonds do not constitute an indebtedness of the District within the meaning of any constitutional or statutory provision or limitation.

We have not been engaged nor have we undertaken to review or verify and therefore express no opinion as to the accuracy, adequacy, fairness or completeness of any offering memorandum or other offering materials relating to the 2012A Bonds, except as may be otherwise set forth in our supplemental opinion delivered to the initial purchasers of the 2012A Bonds. In addition, we have not passed upon and therefore express no opinion as to the compliance by any party involved in this financing, or the necessity of such parties complying, with any federal or state registration requirements or security statutes, regulations or rulings with respect to the offer and sale of the 2012A Bonds

We express no opinion with respect to any other document or agreement entered into by the District or by any other person in connection with the 2012A Bonds, other than as expressed herein.

Our opinions expressed herein are predicated upon present laws, facts and circumstances, and we

assume no affirmative obligation to update the opinions expressed herein if such laws, facts or circumstances change after the date hereof.

Respectfully submitted,

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Appendix D

Form of Continuing Disclosure Agreement

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CONTINUING DISCLOSURE AGREEMENT

This CONTINUING DISCLOSURE AGREEMENT (the “Disclosure Agreement”) dated as of April 19, 2012 is executed and delivered by the POINCIANA COMMUNITY DEVELOPMENT DISTRICT (the “District”) and AVATAR PROPERTIES INC., a Florida corporation (the “Developer”), and joined in by the Disclosure Representative and the Trustee (as such terms are herein defined), in connection with the issuance of $13,285,000 Poinciana Community Development District Senior Special Assessment Refunding Bonds, Series 2012A-1 (the "Series 2012 Senior Bonds") and the $8,000,000 Poinciana Community Development District Subordinate Special Assessment Refunding Bonds, Series 2012A-2 (the “Series 2012 Subordinate Bonds” and collectively with the Series 2012 Senior Bonds, the “Bonds”). The Bonds are being issued pursuant to the a Master Trust Indenture, dated as of April 1, 2000 (the "Master Indenture"), from the District to U. S Bank National Association (successor in trust to First Union National Bank), as Trustee (the "Trustee") as supplemented by a Second Supplemental Trust Indenture, dated as of April 1, 2012 (the "Supplemental Indenture" and together with the Master Indenture, the "Indenture"). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and in consideration of the mutual promises and other considerations contained herein, the District and the Developer covenant and agree as follows:

1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being

executed and delivered by the District and the Developer for the benefit of the Owners of the Bonds and to assist the Participating Underwriter of the Bonds in complying with the applicable provisions of Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended from time to time (the “Rule”). The District and Developer have no reason to believe that this Disclosure Agreement does not satisfy the requirements of the Rule and the execution and delivery of this Disclosure Agreement is intended to comply with the Rule. To the extent it is later determined by a court of competent jurisdiction, a governmental regulatory agency, or an attorney specializing in federal securities law that the Rule requires the District or the Developer to provide additional information, the District and the Developer, as applicable, agree to promptly provide such additional information.

The provisions of this Disclosure Agreement are supplemental and in addition to the

provisions of the Indenture with respect to reports, filings and notifications provided for therein, and do not in any way relieve the District, the Trustee or any other person of any covenant, agreement or obligation under the Indenture (or remove any of the benefits thereof) nor shall anything herein prohibit the District, the Trustee or any other person from making any reports, filings or notifications required by the Indenture or any applicable law.

2. Definitions. In addition to the definitions set forth in 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:

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“Annual Report” shall mean any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

“Assessments” shall mean the non-ad valorem special assessments pledged to the

payment of the Bonds pursuant to the Indenture. “Business Day” means any day other than a Saturday, Sunday or a day on which the

District is required, or authorized or not prohibited by law (including executive orders), to close and is closed.

“Developer Report” shall mean any Developer Report provided by the Developer, its

successors or assigns pursuant to, and as described in, Sections 5 and 6 of this Disclosure Agreement.

“Development” shall have meaning ascribed thereto in the Official Statement. “Disclosure Representative” shall mean the person or entity serving as District Manager

from time to time or such other officer or employee of the District as the District shall designate in writing to the Trustee and the Dissemination Agent from time to time.

“Dissemination Agent” shall mean the District, acting in its capacity as Dissemination

Agent hereunder, or any successor Dissemination Agent designated in writing by the District and which has filed with the District and Trustee a written acceptance of such designation.

“Fiscal Year” shall mean the period commencing on October 1 and ending on September

30 of the next succeeding year, or such other period of time provided by applicable law. “Official Statement” shall mean the final offering document relating to the Bonds. “Listed Event” shall mean any of the events listed in Section 7(a) of this Disclosure

Agreement. “MSRB” means the Municipal Securities Rulemaking Board. “Obligated Person(s)” shall mean, with respect to the Bonds, those person(s) who either

generally or through an enterprise fund or account of such persons are committed by contract or other arrangement to support payment of all or a part of the obligations on such Bonds, which person(s) shall include the District and, for the purposes of this Disclosure Agreement only, the Developer for so long as the Developer is the owner of (or is responsible for developing as the case may be) at least twenty percent (20%) of the lands which have been determined by the District to be lands benefited by the project financed with proceeds of the Bonds or are responsible for payment of at least twenty percent (20%) of the Assessments.

“Owners” shall have the meaning ascribed thereto in the Indenture with respect to the

Bonds and shall include beneficial owners of the Bonds, including those that have the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of any Bonds

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(including persons holding Bonds through nominees, depositories or other intermediaries), or are treated as the owner of any Bonds for federal income tax purposes.

“Participating Underwriter” shall mean, MBS Capital Markets, LLC, in its capacity as the

original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.

"Repository" or “EMMA” shall mean each entity authorized and approved by the

Securities and Exchange Commission from time to time to act as a repository for purposes of complying with the Rule. The Repositories currently approved by the Securities and Exchange Commission may be found by visiting the Securities and Exchange Commission's website at http://www.sec.gov/info/municipal/nrmsir.htm. As of the date hereof, the Repository recognized by the Securities and Exchange Commission for such purpose is the Municipal Securities Rulemaking Board, which currently accepts continuing disclosure submissions through its Electronic Municipal Market Access ("EMMA") web portal at "http://emma.msrb.org.".

“State” shall mean the State of Florida. “State Repository” shall mean the state information repository, if any, designated by the

State and with which filings are required to be made by the District in accordance with the Rule. 3. Content of Annual Reports. (a) The District’s Annual Report shall contain or incorporate by reference the

following, which includes an update of the financial and operating data of the District to the extent presented in the Official Statement. All information in the Annual Report shall be presented for the immediately preceding Fiscal Year and, to the extent available, the current Fiscal Year:

(i) The amount of Assessments levied. (ii) The amount of Assessments collected from property owners. (iii) If available, the amount of delinquencies greater than 150 days, and, in the

event that delinquencies amount to more than ten percent (10%) of the amounts of Assessments due in any year, a list of delinquent property owners.

(iv) The amount of tax certificates sold, if any, and the balance, if any,

remaining for sale. (v) All fund balances in all Funds and Accounts for the Bonds. The District

shall provide any Owners and the Dissemination Agent with this information more frequently than annually within thirty (30) days of the written request of the Owners.

(vi) The total amount of Bonds Outstanding.

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(vii) The amount of principal and interest due on the Bonds. (viii) The most recent audited financial statements of the District, which shall be

prepared in accordance with governmental accounting standards promulgated by the Government Accounting Standards Board.

(b) To the extent any of the items set forth in subsections (i) through (vii) above are

included in the audited financial statements referred to in subsection (viii) above, they do not have to be separately set forth. Any or all of the items listed above may be incorporated by reference from other documents, including offering documents of debt issues of the District or related public entities, which have been submitted to each of the Repositories or the SEC. If the document incorporated by reference is a final offering document, it must be available from the MSRB. The District shall clearly identify each such other document so incorporated by reference.

4. Provision of Annual Reports. (a) Subject to the following sentence, the District shall provide the Annual Report to

the Dissemination Agent no later than 180 days after the close of the District’s Fiscal Year, commencing with the Fiscal Year ended September 30, 2012 (the “Annual Filing Date”). The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 3(b) of this Disclosure Agreement; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report, and may be submitted in accordance with State law, which currently requires such audited financial statements to be provided up to, but no later than, nine (9) months after the close of the District’s Fiscal Year. The District shall cause the Dissemination Agent to provide to each Repository (i) the components of an Annual Report which satisfies the requirements of this subsection 4(a) and (ii) any information provided to Owners and the Dissemination Agent pursuant to Section 3(a)(v) of this Disclosure Agreement. In furtherance thereof, the Dissemination Agent shall request the Annual Report (which request shall be in writing and may be made via e-mail to the Disclosure Representative) at least thirty (30) days prior to the Annual Filing Date. If the District’s Fiscal Year changes, the District shall give notice of such change in the same manner as for a Listed Event under Section 7.

(b) If on the fifteenth (15th) day prior to each Annual Filing Date the Dissemination

Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to remind the District of its undertaking to provide the Annual Report pursuant to this Section 4. Upon such reminder, the Disclosure Representative shall either (i) provide the Dissemination Agent with an electronic copy of the Annual Report in accordance with Section 4(a) above, or (ii) instruct the Dissemination Agent in writing that the District will not be able to file the Annual Report within the time required under this Disclosure Agreement, state the date by which the Annual Report for such year will be provided and instruct the Dissemination Agent that a Listed Event as described in Section 7(a)(xii) has occurred and to immediately send a notice to the National Repository or the MSRB and the State Repository (if any) in substantially the form attached as Exhibit A.

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(c) If the Dissemination Agent has not received an Annual Report by 12:00 noon on

the first business day following the Annual Filing Date for the Annual Report, a Listed Event described in Section 7(a)(xii) shall have occurred and the District hereby directs the Dissemination Agent to immediately send a notice to each National Repository or the MSRB and the State Repository (if any) in substantially the form attached as Exhibit A.

(d) The Dissemination Agent shall:

(i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and

(ii) promptly upon fulfilling its obligations under subsection (a) above, file a

notice with the District stating that the Annual Report has been provided pursuant to this Disclosure Agreement and stating the date(s) it was provided.

5. Content of Developer Reports. (a) The Developer, so long as it is an Obligated Person for purposes of this

Disclosure Agreement, shall prepare a Developer Report no later than thirty (30) days after the end of each calendar quarter commencing June 30, 2012, provided, however, that so long as the Developer is a reporting company, such thirty (30) days shall be extended to the date of filing of its respective 10K or 10Q, if later, as the case may be (each, a “Quarterly Receipt Date”). At such time as the Developer is no longer an Obligated Person, the Developer will no longer be obligated to prepare any quarterly Developer Report pursuant to this Disclosure Agreement.

(b) Each quarterly Developer Report shall incorporate by reference the information

contained in the 10K or 10Q referenced above and shall address the following information, to the extent applicable to the portion of the Development owned by the Developer:

(i) The number of single-family homes and multi-family homes, respectively,

planned on property subject to the Assessments. (ii) The number of units, type of units and square footage of commercial

property or other non-residential uses planned on property subject to the Assessments. (iii) Information about closed sales to builders, including the amount and type

of property closed (lots, parcels, raw land, multi-family lot, single-family lot, etc.), together with the name of each builder.

(iv) Information about closed sales to retail end users, including the amount

and type of property closed (multi-family home, single-family home, etc.). (v) The number of single-family homes and multi-family homes, respectively,

under contract with retail end users.

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(vi) The number of single-family lots and multi-family lots, respectively, under contract with builders, together with the name of each builder.

(vii) The number of single-family homes and multi-family homes, respectively,

constructed. (viii) The number of single-family homes and multi-family homes, respectively,

under construction. (ix) The estimated date of complete build-out of residential units. (x) The number of acres and type of property (parcels, raw land, etc.) sold for

non-residential development, if any. (xi) The square footage of non-residential property constructed, if any. (xii) Whether the Developer has made any bulk sale of the land subject to the

Assessments other than as contemplated by the Official Statement. (xiii) The anchor (more than ten percent (10%) of the square footage) tenants of

non-residential property, if any. (xiv) Materially adverse changes or determinations to permits/approvals for the

Development which necessitate changes to the Developer’s land-use or other plans for the Development.

(xv) Updated plan of finance, if applicable (i.e., status of any credit

enhancement, issuance of additional bonds to complete project, draw on credit line of Developer, additional mortgage debt, etc.).

(xvi) Any event that would have a material adverse impact on the

implementation of the Development as described in the Official Statement or on the Developer’s ability to undertake the Development as described in the Official Statement.

(c) Any of the items listed in subsection (b) above may be incorporated by reference

from other documents which have been submitted to EMMA or the SEC. The Developer shall clearly identify each such other document so incorporated by reference.

(d) If the Developer sells, assigns or otherwise transfers ownership of real property in

the Development to a third party, which will in turn be an Obligated Person for purposes of this Disclosure Agreement as a result thereof (a “Transfer”), the Developer hereby agrees to require such third party to comply with the disclosure obligations of the Developer hereunder for so long as such third party is an Obligated Person hereunder, to the same extent as if such third party were a party to this Disclosure Agreement. The Developer shall promptly notify the District and the Dissemination Agent in writing of any Transfer. For purposes of Sections 5 and 6 hereof, the term “Developer” shall be deemed to include the Developer and any third party that becomes an

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Obligated Person hereunder as a result of a Transfer. In the event that the Developer remains an Obligated Person hereunder following any Transfer, nothing herein shall be construed to relieve the Developer from its obligations hereunder.

6. Provision of Developer Reports. (a) The Developer shall provide a Developer Report which contains the information

in Section 5(b) of this Disclosure Agreement to the Dissemination Agent no later than the Quarterly Receipt Date for such Developer Report. Within thirty (30) days of the Quarterly Receipt Date, the Dissemination Agent shall file the Developer Report provided to it by the Developer with each Repository (the “Quarterly Filing Date”).

(b) If on the seventh (7th) day prior to each Quarterly Receipt Date the Dissemination

Agent has not received a copy of the Developer Report due on such Quarterly Receipt Date, the Dissemination Agent shall contact the Developer by telephone and in writing (which may be by e-mail) to remind the Developer of its undertaking to provide the Developer Report pursuant to Section 5. Upon such reminder, the Developer shall either (i) provide the Dissemination Agent with an electronic copy of the Developer Report in accordance with Section 6(a) above, or (ii) instruct the Dissemination Agent in writing that such Obligated Party will not be able to file the Developer Report within the time required under this Disclosure Agreement and state the date by which such Developer Report will be provided.

(c) If the Dissemination Agent has not received a Developer Report that contains, at a

minimum, the information in Section 5(b) of this Disclosure Agreement by 12:00 noon on the first business day following each Quarterly Receipt Date, a Listed Event described in Section 7(a)(xii) shall have occurred and the District and the Developer hereby direct the Dissemination Agent to send a notice to EMMA in substantially the form attached as Exhibit A, with a copy to the District. The Dissemination Agent shall file such notice no later than thirty (30) days following the applicable Quarterly Receipt Date.

7. Reporting of Significant Events.

(a) Pursuant to the provisions of this Section 7, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds to the Dissemination Agent in writing in sufficient time in order to allow the Dissemination Agent to file notice of the occurrence of such Listed Event in a timely manner not in excess of ten (10) business days after the occurrence of the event, with the exception of the event described in number 15 below, which notice shall be given in a timely manner:

1. principal and interest payment delinquencies;

2. non-payment related defaults, if material;

3. unscheduled draws on debt service reserves reflecting financial difficulties;

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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 Internal Revenue Service 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;

7. modifications to rights of the holders of the Bonds, if material;

8. Bond calls, if material, and tender offers;

9. defeasances;

10. release, substitution, or sale of property securing repayment of the Bonds,

other than in the normal course of business, if material;

11. ratings changes; 12. an Event of Bankruptcy or similar event of an Obligated Person; 13. the consummation of a merger, consolidation, or acquisition involving an

Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, 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; and

14. appointment of a successor or additional trustee or the change of name of

a trustee, if material; and 15. notice of any failure on the part of the District to meet the requirements of

Section 3 hereof.

(b) The notice required to be given in paragraph 5(a) above shall be filed with any Repository, in electronic format as prescribed by such Repository.

8. Identifying Information. In accordance with the Rule, all disclosure filings submitted in pursuant to this

Disclosure Agreement to any Repository must be accompanied by identifying information as prescribed by the Repository. Such information may include, but not be limited to:

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(a) the category of information being provided;

(b) the period covered by any annual financial information, financial statement or other financial information or operation data;

(c) the issues or specific securities to which such documents are related (including CUSIPs, District name, state, issue description/securities name, dated date, maturity date, and/or coupon rate);

(d) the name of any Obligated Person other than the District;

(e) the name and date of the document being submitted; and

(f) contact information for the submitter.

9. Termination of Disclosure Agreement. This Disclosure Agreement shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds.

10. Dissemination Agent. The District may, from time to time, appoint

or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the District shall be the Dissemination Agent.

11. Amendment; Waiver. Notwithstanding any other provision of this Disclosure

Agreement, the District and the Developer may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws, acceptable to the District, to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule.

Notwithstanding the above provisions of this Section 11, no amendment to the provisions

of Sections 5 and 6 hereof may be made without the consent of the Developer as long as the Developer is an Obligated Person.

In the event of any amendment or waiver of a provision of this Disclosure Agreement, the

District shall describe such amendment in the next Annual 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 in accounting principles, on the presentation) of financial information or operating data being presented by the District. 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 7(c); and (ii) the Annual Report for the year in which the change is made should present a comparison (in

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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.

12. Additional Information. Nothing in this Disclosure Agreement shall be deemed

to prevent the District or 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 any Annual Report, Developer Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, or if the Developer chooses to include any information in any Developer Report in addition to that which is specifically required by this Disclosure Agreement, neither the District nor the Developer, as applicable, shall have any obligation under this Disclosure Agreement to update such information or include it in any future Annual Report, any future Developer Report or notice of occurrence of a Listed Event. The Developer agrees to provide the District with a copy of any information in addition to the Developer Report provided by it to the Dissemination Agent or any Repository.

13. Default. In the event of a failure of the District, the Disclosure Representative,

the Developer or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee may (and, at the request of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Bonds and receipt of indemnity satisfactory to the Trustee, shall), or any beneficial owner of a bond may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District, the Disclosure Representative, the Developer or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement by the Developer shall not be deemed a default by the District hereunder and no default hereunder shall be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the District, the Disclosure Representative, the Developer or the Dissemination Agent, to comply with this Disclosure Agreement shall be an action to compel performance.

14. Duties of Dissemination Agent. The Dissemination Agent shall have only such

duties as are specifically set forth in the applicable written dissemination agent agreement between the District and such Dissemination Agent and in this Disclosure Agreement. The Dissemination Agent shall have no obligation to notify any other party hereto of an event that may constitute a Listed Event. The District, the Disclosure Representative and the Developer represent and warrant that they will supply, in a timely fashion, any information reasonably requested by the Dissemination Agent that is necessary in order for the Dissemination Agent to carry out its duties under this Disclosure Agreement. The District, the Disclosure Representative and the Developer acknowledge and agree that the information to be collected and disseminated by the Dissemination Agent will be provided by the District, the Disclosure Representative, the Developer and others. The Dissemination Agent’s duties do not include authorship or production of any materials, and the Dissemination Agent shall have no responsibility hereunder

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for the content of the information provided to it by the District, the Disclosure Representative, or the Developer as thereafter disseminated by the Dissemination Agent.

15. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the

District, the Disclosure Representative, the Developer, the Dissemination Agent, the Trustee, the Participating Underwriter and Owners of the Bonds (the Dissemination Agent, Participating Underwriter and Owners of the Bonds being hereby deemed express third party beneficiaries of this Agreement), and shall create no rights in any other person or entity.

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.

17. District, Disclosure Representative and Trustee Cooperation. The District,

the Disclosure Representative and the Trustee agree that the Dissemination Agent, in such capacity hereunder, may receive, upon request, from the District, the Disclosure Representative and the Trustee, on a timely basis, any information or reports within their respective control the Dissemination Agent requests in furtherance of the Dissemination Agent’s duties hereunder, including balances in the Funds and Accounts established under the Indenture and such other information as it deems necessary to review compliance by the other parties hereto with their respective obligations hereunder. In furtherance thereof, the District, through its Disclosure Representative, agrees to provide the Dissemination Agent with a certified copy of any tax roll provided to the County Tax Collector promptly after its delivery to the County Tax Collector, but no later than September 30 of the current Fiscal Year, and the adopted budget for the upcoming Fiscal Year by September 30 of the current year. In addition, the District acknowledges and agrees that any modifications to assessment methodologies which affect the Assessments and any other payment source of the Bonds and any “true up” implementations regarding such Assessments shall be adopted by District resolution and that the District, through its Disclosure Representative, will provide the Dissemination Agent and the Trustee with notice of such resolution(s) within 30 days of adoption.

18. Governing Law. This Disclosure Agreement shall be governed by the laws of

the State of Florida and Federal law and venue shall be in any state or federal court having jurisdiction in Polk County, Florida.

19. Binding Effect. This Disclosure Agreement shall be binding upon each party and

upon each successor and assignee of each party and shall inure to the benefit of, and be enforceable by, each party and each successor and assignee of each party.

[SIGNATURE PAGES TO FOLLOW]

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SIGNATURE PAGE FOR CONTINUING DISCLOSURE AGREEMENT

(Poinciana Community Development District)

IN WITNESS WHEREOF, the undersigned has executed this Disclosure Agreement as of the date and year set forth above.

ATTEST POINCIANA COMMUNITY DEVELOPMENT DISTRICT:

_____________________________ By: Name: _______________________ Title: ________________________ Chairman, Board of Supervisors

DEVELOPER:

AVATAR PROPERTIES INC.

By: ____________________________________ Name: __________________________________ Title: ___________________________________

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SIGNATURE PAGE FOR CONTINUING DISCLOSURE AGREEMENT (Poinciana Community Development District)

Joined by Disclosure Services, LLC, , as agent for Prager & Co., LLC, as Disclosure Representative for purposes of Section 4, Section 13, Section 14, Section 15 and Section 17 only.

DISCLOSURE REPRESENTATIVE:

DISCLOSURE SERVICES, LLC, as agent for Prager & Co., LLC By:

Name: ____________________________________ Title: _____________________________________

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SIGNATURE PAGE FOR CONTINUING DISCLOSURE AGREEMENT (Poinciana Community Development District)

Joined by U.S. Bank National Association, as Trustee for purposes of Section 13, Section 15 and Section 17 only.

TRUSTEE:

U.S BANK NATIONAL ASSOCIATION By:

Name: ____________________________________ Title: _____________________________________

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EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT/DEVELOPER REPORT

Name of District: Poinciana Community Development District

Name of Bond Issue: $13,285,000 Senior Special Assessment Refunding Bonds, Series 2012A-1 and $8,000,000 Subordinate Special Assessment Refunding Bonds, Series 2012A-2

Date of Issuance: April 19, 2012

NOTICE IS HEREBY GIVEN that [the District has not provided an Annual Report as required by Section 4(a)] [the Developer has not provided a Developer Report which contains the information required by Section 5(b)] of the Continuing Disclosure Agreement dated as of ___, 2012, among the District and the Developer named therein, and joined in by the Disclosure Representative and Trustee named therein, executed and delivered in connection with the above-referenced Bonds. The [District][Developer] has advised the undersigned that it anticipates that the [Annual Report][Developer Report] will be filed by ______________, 20____].

Dated: ____________________

[DISSEMINATION AGENT]

cc: District Developer

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[THIS PAGE INTENTIONALLY LEFT BLANK]

Appendix E

General Purpose Financial Statements for the Fiscal Year Ended September 30, 2010

[THIS PAGE INTENTIONALLY LEFT BLANK]

POINCIANA COMMUNITY DEVELOPMENT DISTRICT

POLK COUNTY, FLORIDA FINANCIAL REPORT

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010

POINCIANA COMMUNITY DEVELOPMENT DISTRICT POLK COUNTY, FLORIDA

TABLE OF CONTENTS

Page

INDEPENDENT AUDITOR’S REPORT 1

MANAGEMENT’S DISCUSSION AND ANALYSIS 2-5

BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements:

Statement of Net Assets 6 Statement of Activities 7 Fund Financial Statements:

Balance Sheet – Governmental Funds 8 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Assets 9 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 10 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 11 Notes to the Financial Statements 12-19

REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance –

Budget and Actual – General Fund 20Notes to Required Supplementary Information 21

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING ANDCOMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIALSTATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS 22

MANAGEMENT LETTER REQUIRED BY CHAPTER 10.550 OF THE RULESOF THE AUDITOR GENERAL OF THE STATE OF FLORIDA 23-25

2

MANAGEMENT’S DISCUSSION AND ANALYSIS

Our discussion and analysis of Poinciana Community Development District, Polk County, Florida’s (“District”) financial performance provides an overview of the District’s financial activities for the fiscal year ended September 30, 2010. Please read it in conjunction with the District’s Independent Auditor’s Report, basic financial statements, accompanying notes and supplementary information to the basic financial statements.

FINANCIAL HIGHLIGHTS

The liabilities of the District exceeded its assets at the close of the most recent fiscal year resulting in a net asset deficit balance of $(845,764).

The change in the District’s total net assets in comparison with the prior year was $197,233, an increase. The key components of the District’s net assets and change in net assets are reflected in the table in the government-wide financial statements analysis section.

At September 30, 2010, the District’s governmental funds reported combined ending fund balances of $4,645,861, an increase of $28,940 in comparison with the prior year. Of the total fund balance, $4,339,198 is reserved for debt service, capital projects and other items and the remainder is unreserved fund balance which is available for spending at the District’s discretion.

OVERVIEW OF FINANCIAL STATEMENTS

This discussion and analysis are intended to serve as the introduction to the District’s basic financial statements. The District’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

1) Government-Wide Financial Statements

The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business.

The statement of net assets presents information on all the District’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating.

The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods.

The government-wide financial statements include all governmental activities that are principally supported by special assessment revenues. The District does not have any business-type activities. The governmental activities of the District include general government (management) and maintenance functions.

2) Fund Financial Statements

A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The District has one fund category: governmental funds.

3

OVERVIEW OF FINANCIAL STATEMENTS

2) Fund Financial Statements (Continued)

Governmental Funds

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflow of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a District’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the District’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The District maintains three individual governmental funds for external reporting. Information is presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances for the general, debt service and capital projects funds, all of which are considered to be major funds.

The District adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with the budget.

3) Notes to the Financial Statements

The notes provide additional information that is essential to a full understanding of the data included in the government-wide and fund financial statements.

FINANCIAL ANALYSIS OF GOVERNMENT-WIDE INFORMATION

As noted earlier, net assets may serve over time as a useful indicator of an entity’s financial position. In the case of the District, liabilities exceeded assets at the close of the most recent fiscal year.

A portion of the District’s net assets reflects its investment in capital assets (e.g. land, land improvements, and infrastructure); less any related debt used to acquire those assets that is still outstanding. These assets are used to provide services to residents; consequently, these assets are not available for future spending. Although the District’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

The restricted portion of the District’s net assets represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets may be used to meet the District’s other obligations.

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FINANCIAL ANALYSIS OF GOVERNMENT-WIDE INFORMATION

Key components of the District’s net assets were as follows:

2010 2009Assets, excluding capital assets 4,692,929$ 4,641,747$Capital assets, net 18,721,477 19,068,027

Total assets 23,414,406 23,709,774 Liabilities, excluding long-term liabilities 745,170 737,771 Long-term liabilities 23,515,000 24,015,000

Total liabilities 24,260,170 24,752,771 Net assets

Invested in capital assets, net of related debt (4,793,421) (4,946,089) Restricted for debt service 3,627,090 3,623,080 Unrestricted 320,567 280,012

Total net assets (deficit) (845,764)$ (1,042,997)$

SEPTEMBER 30,NET ASSETS

The change in the District’s net assets during the most recent fiscal year was as an increase. The majority of the increase represents the extent to which ongoing program revenues exceeded the cost of operations and depreciation expense.

Key elements of the District’s change in net assets are reflected in the following table:

2010 2009Revenues:Program revenues 2,850,355$ 2,888,647$General revenues 5,389 680

Total revenues 2,855,744 2,889,327 Expenses: General government 165,423 189,235 Maintenance and operations 798,109 776,024 Interest 1,694,979 1,730,989

Total expenses 2,658,511 2,696,248 Change in net assets 197,233 193,079

Net assets (deficit), beginning (1,042,997) (1,236,076) Net assets (deficit), ending (845,764)$ (1,042,997)$

FOR THE FISCAL YEAR ENDED SEPTEMBER 30,CHANGES IN NET ASSETS

As noted above and in the statement of activities, the cost of all governmental activities during the fiscal year ended September 30, 2010 was $2,671,950. The costs of the District were primarily funded by program revenues. Program revenues were comprised primarily of assessments for both the current and prior fiscal years.

GENERAL BUDGETING HIGHLIGHTS

An operating budget was adopted and maintained by the governing board for the District pursuant to the requirements of Florida Statutes. The budget is adopted using the same basis of accounting that is used in preparation of the fund financial statements. The legal level of budgetary control, the level at which expenditures may not exceed budget, is in the aggregate. Any budget amendments that increase the aggregate budgeted appropriations must be approved by the Board of Supervisors. Actual general fund expenditures did not exceed appropriations for the fiscal year ended September 30, 2010.

The variance between budgeted and actual general fund revenues for the 2010 fiscal year was not considered significant. The actual general fund expenditures were lower than budgeted amounts due primarily to anticipated repair and maintenance work which was not required.

5

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets At September 30, 2010, the District had $20,800,777 invested in land and land improvements and drainage infrastructure. In the government-wide statements depreciation of $2,079,300 has been taken, which resulted in a net book value of $18,721,477. More detailed information about the District’s capital assets is presented in the notes of the financial statements.

Capital Debt

At September 30, 2010, the District had $23,515,000 in Bonds outstanding for its governmental activities.More detailed information about the District’s capital debt is presented in the notes of the financial statements.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

The District does not anticipate any major projects or significant changes to its infrastructure maintenance program for fiscal year 2011. In addition, it is anticipated that the general operations of the District will remain fairly constant.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, land owners, customers, investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the financial resources it manages and the stewardship of the facilities it maintains. If you have questions about this report or need additional financial information, contact the Poinciana Community Development District’s Finance Department at 210 N. University Drive, Suite 702, Coral Springs, Florida 33071.

6

POINCIANA COMMUNITY DEVELOPMENT DISTRICT POLK COUNTY, FLORIDA

STATEMENT OF NET ASSETS SEPTEMBER 30, 2010

ASSETSCash and equivalents 55,720$ Certificates of deposit 250,880 Investments 7,056 Interest receivables 13,536 Due from other governments 17,089 Prepaids 28,930 Restricted assets:

Investments 4,319,718 Capital assets

Nondepreciable 10,404,277 Depreciable, net 8,317,200

Total assets 23,414,406

LIABILITIESAccounts payable 27,055 Due to Developer 20,013 Accrued interest payable 698,102 Non-current liabilities: Due within one year 500,000 Due in more than one year 23,015,000 Total liabilities 24,260,170

NET ASSETSInvested in capital assets, net of related debt (4,793,421) Restricted for debt service 3,627,090 Unrestricted 320,567 Total net assets (deficit) (845,764)$

Governmental Activities

See notes to the financial statements

7

POINCIANA COMMUNITY DEVELOPMENT DISTRICT POLK COUNTY, FLORIDA

STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010

Net (Expense) Revenue and

Changes in Net AssetsCharges Operating Capital

for Grants and Grants and GovernmentalFunctions/Programs Expenses Services Contributions Contributions ActivitiesPrimary government: Governmental activities:

General government 165,423$ 165,423$ -$ -$ -$ Maintenance and operations 798,109 451,972 - 3,182 (342,955) Interest on long-term debt 1,694,979 2,222,800 6,978 - 534,799

Total governmental activities 2,658,511 2,840,195 6,978 3,182 191,844

General revenues:Unrestricted investment earnings 3,808 Miscellaneous 1,581

Total general revenues 5,389 Change in net assets 197,233 Net assets (deficit) - beginning (1,042,997) Net assets (deficit) - ending (845,764)$

Program Revenues

See notes to the financial statements

8

POINCIANA COMMUNITY DEVELOPMENT DISTRICT POLK COUNTY, FLORIDA

BALANCE SHEET GOVERNMENTAL FUNDS

SEPTEMBER 30, 2010

Debt CapitalGeneral Service Projects

ASSETSCash and equivalents 55,720$ -$ -$ 55,720$ Certificates of deposit 250,880 - - 250,880 Investments 7,056 4,319,616 102 4,326,774 Interest receivable 1,254 12,282 - 13,536 Due from other governments 3,791 13,298 - 17,089 Due from other fund 15,017 - - 15,017 Prepaids 13,904 15,026 - 28,930 Total assets 347,622$ 4,360,222$ 102$ 4,707,946$

LIABILITIES AND FUND BALANCESLiabilities:

Accounts payable 27,055$ -$ -$ 27,055$ Due to Developer - 20,013 - 20,013 Due to other fund - 15,017 - 15,017

Total liabilities 27,055 35,030 - 62,085

Fund balances:Reserved for:

Debt service - 4,325,192 - 4,325,192 Capital projects - - 102 102 Other 13,904 - - 13,904

Unreserved, reported in: General fund 306,663 - - 306,663

Total fund balances 320,567 4,325,192 102 4,645,861

Total liabilities and fund balances 347,622$ 4,360,222$ 102$ 4,707,946$

Total Governmental

Funds

Major Funds

See notes to the financial statements

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POINCIANA COMMUNITY DEVELOPMENT DISTRICT POLK COUNTY, FLORIDA

RECONCILITATION OF THE BALANCE SHEET- GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS

SEPTEMBER 30, 2010

Fund balance - governmental funds 4,645,861$

Amounts reported for governmental activities in the statement of net assets are different because:

Capital assets used in governmental activities are not financial resources, and, therefore, are not reported as assets in the governmental funds. The statement of net assets includes those capital assets, net of accumulated depreciation, in the net assets of the government as a whole.

Cost of capital assets 20,800,777 Accumulated depreciation (2,079,300) 18,721,477

Liabilities not due and payable from current available resources are not reported as liabilities in the governmental fund statements. All liabilities, both current and long-term, are reported in the government-wide financial statements.

Accrued interest payable (698,102) Bonds payable (23,515,000) (24,213,102)

Net assets of governmental activities (845,764)$

See notes to the financial statements

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POINCIANA COMMUNITY DEVELOPMENT DISTRICT POLK COUNTY, FLORIDA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010

Debt CapitalGeneral Service Projects

REVENUESAssessments 617,395$ 2,222,800$ -$ 2,840,195$ Developer contributions - - 3,182 3,182Interest 3,808 6,978 - 10,786Miscellaneous revenue 1,581 - - 1,581

Total revenues 622,784 2,229,778 3,182 2,855,744

EXPENDITURESCurrent:

General government 130,670 30,789 3,964 165,423Maintenance and operations 451,559 - - 451,559

Debt service:Principal - 500,000 - 500,000Interest - 1,709,822 - 1,709,822

Total expenditures 582,229 2,240,611 3,964 2,826,804

Excess (deficiency) of revenues over (under) expenditures 40,555 (10,833) (782) 28,940

Fund balances - beginning 280,012 4,336,025 884 4,616,921

Fund balances - ending 320,567$ 4,325,192$ 102$ 4,645,861$

Major Funds Total Governmental

Funds

See notes to the financial statements

11

POINCIANA COMMUNITY DEVELOPMENT DISTRICT POLK COUNTY, FLORIDA

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010

28,940$

different because:

statements but is reported as an expense in the statement of activities. (346,550)

governmental fund statements but such repayments reduce liabilities in the statement of net assets and are eliminated in the statement of activities. 500,000

and prior fiscal year is recorded in the statement of activities but not in the fund financial statements. 14,843

Change in net assets of governmental activities 197,233$

Net change in fund balances - total governmental funds

The change in accrued interest on long-term liabilities between the current

Depreciation of capital assets is not recognized in the governmental fund

Amounts reported for governmental activities in the statement of activities are

Repayment of long-term liabilities are reported as expenditures in the

See notes to the financial statements

12

POINCIANA COMMUNITY DEVELOPMENT DISTRICT POLK COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

NOTE 1 – NATURE OF ORGANIZATION AND REPORTING ENTITY

Poinciana Community Development District ("District") was created on November 1, 1999 pursuant to the Uniform Community Development District Act of 1980, otherwise known as Chapter 190, Florida Statutes. Chapter 190 provides among other things, the power to manage basic services for community development, power to borrow money and issue bonds, and to levy and assess non-ad valorem assessments for the financing and delivery of capital infrastructure. Also, Chapter 190 provides that a Community Development District with a size of 1,000 acres or more may be established by rule adopted under Chapter 120 by the Florida Land and Water Adjudicatory Commission. The District was established by adopting Rule 42AA-1.

The District was established for the purpose of financing and managing the acquisition, construction, maintenance and operations of the infrastructure within the District.

The District is governed by the Board of Supervisors ("Board") which is composed of five members. The Supervisors are elected on an at large basis by the owners of the property within the District. The Board of Supervisors of the District exercise all powers granted to the District pursuant to Chapter 190, Florida Statutes. Three of the five Board members are affiliated with Avatar Properties, Inc., an affiliate of Avatar Holdings (“Developer”) at September 30, 2010.

The Board has the responsibility for: 1. Assessing and levying assessments. 2. Approving budgets. 3. Exercising control over facilities and properties. 4. Controlling the use of funds generated by the District. 5. Approving the hiring and firing of key personnel. 6. Financing improvements.

The financial statements were prepared in accordance with Governmental Accounting Standards Board (“GASB”) Statement 14, and Statement 39, an amendment of GASB Statement 14. Under the provisions of those standards, the financial reporting entity consists of the primary government, organizations for which the District Board of Supervisors is considered to be financially accountable, and other organizations for which the nature and significance of their relationship with the District are such that, if excluded, the financial statements of the District would be considered incomplete or misleading. There are no entities considered to be component units of the District; therefore, the financial statements include only the operations of the District.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Government-Wide and Fund Financial StatementsThe basic financial statements include both government-wide and fund financial statements.

The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the non-fiduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment. Operating-type special assessments for maintenance and debt service are treated as charges for services. and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not included among program revenues are reported instead as general revenues.

13

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Measurement Focus, Basis of Accounting and Financial Statement PresentationThe government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Assessments are recognized as revenues in the year for which they are levied. Grants and similar items are to be recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focusand the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due.

AssessmentsAssessments are non-ad valorem assessments on benefited lands within the District. Assessments are levied annually to pay for the operations and maintenance of the District. Assessments are collected annually to provide funds for the debt service on the portion of the Bonds which are not paid by prepaid assessments. The fiscal year for which annual assessments are levied begins on October 1 with discounts available for payments on platted lots through February 28 and become delinquent on April 1. The District’s annual assessments for operations and debt service are billed and collected by the County Tax Collector for platted lots. Unplatted lands are billed directly by the District. The amounts remitted to the District are net of applicable discounts or fees. In addition, amounts remitted by the County Tax Collector include interest on monies held from the day of collection to the day of distribution.

Assessments and interest associated with the current fiscal period are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. The portion of assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable only when cash is received by the District.

The District reports the following major governmental funds:

General FundThe general fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund.

Debt Service FundThe debt service fund is used to account for the accumulation of resources for the annual payment of principal and interest on long-term debt.

Capital Projects FundThis fund accounts for the financial resources to be used for the acquisition or construction of major infrastructure within the District.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements.

When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first for qualifying expenditures, then unrestricted resources as they are needed.

14

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Assets, Liabilities and Net Assets or Equity

Restricted AssetsThese assets represent cash and investments set aside pursuant to Bond covenants or other contractual restrictions.

Deposits and InvestmentsThe District’s cash and cash equivalents are considered to be cash on hand and demand deposits.

The District has elected to proceed under the Alternative Investment Guidelines as set forth in Section 218.415 (17) Florida Statutes. The District may invest any surplus public funds in the following:

a) The Local Government Surplus Trust Funds, or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act;

b) Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency;

c) Interest bearing time deposits or savings accounts in qualified public depositories; d) Direct obligations of the U.S. Treasury.

Securities listed in paragraphs c and d shall be invested to provide sufficient liquidity to pay obligations as they come due. In addition, surplus funds may be deposited into certificates of deposit which are insured and any unspent Bond proceeds are required to be held in investments as specified in the Bond Indenture.

The District records all interest revenue related to investment activities in the respective funds and reports investments at fair value.

Prepaid ItemsCertain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

Capital AssetsCapital assets, which include property, plant and equipment, and infrastructure assets (e.g., roads, sidewalks and similar items) are reported in the government activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.

Property, plant and equipment of the District are depreciated using the straight-line method over the following estimated useful lives:

Assets Years

Infrastructure – drainage structures 30

In the governmental fund financial statements, amounts incurred for the acquisition of capital assets are reported as fund expenditures. Depreciation expense is not reported in the governmental fund financial statements.

15

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Assets, Liabilities and Net Assets or Equity (Continued)

Deferred RevenueGovernmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned.

Long-Term ObligationsIn the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized ratably over the life of the Bonds. Bonds payable are reported net of applicable premiums or discounts.

In the fund financial statements, governmental fund types recognize premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Fund Equity/Net AssetsIn the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change.

Net assets in the government-wide financial statements are categorized as invested in capital assets, net of related debt, restricted or unrestricted. Invested in capital assets, net of related debt represents net assets related to infrastructure and property, plant and equipment, net of any related debt. Restricted net assets represent the assets restricted by the District’s Bond covenants or other contractual restrictions.

Other Disclosures

Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates.

NOTE 3 – BUDGETARY INFORMATION

The District is required to establish a budgetary system and an approved Annual Budget. Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the general fund. All annual appropriations lapse at fiscal year end.

The District follows these procedures in establishing the budgetary data reflected in the financial statements.

a) Each year the District Manager submits to the District Board a proposed operating budget for the fiscal year commencing the following October 1.

b) Public hearings are conducted to obtain public comments. c) Prior to October 1, the budget is legally adopted by the District Board. d) All budget changes must be approved by the District Board. e) The budgets are adopted on a basis consistent with generally accepted accounting principles. f) Unused appropriation for annually budgeted funds lapse at the end of the year.

16

NOTE 4 – DEPOSITS AND INVESTMENTS

DepositsThe District’s cash balances, including the money market account, were entirely covered by federal depository insurance or by a collateral pool pledged to the State Treasurer. Florida Statutes Chapter 280, "Florida Security for Public Deposits Act", requires all qualified depositories to deposit with the Treasurer or another banking institution eligible collateral equal to various percentages of the average daily balance for each month of all public deposits in excess of any applicable deposit insurance held. The percentage of eligible collateral (generally, U.S. Governmental and agency securities, state or local government debt, or corporate bonds) to public deposits is dependent upon the depository's financial history and its compliance with Chapter 280. In the event of a failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses.

InvestmentsThe District’s investments were held as follows at September 30, 2010:

Fair Value Credit Risk MaturitiesAmerican Government Obligation Funds Class Y 102$ S&P AAAm

Weighted average of the fund portfolio: 45 days

U S Treasury Bill 449,955 Not Applicable October 28, 2010U S Treasury Note 198,750 Not Applicable April 30, 2011U.S. Bank Interest Bearing Commercial Paper 450,000 S&P A-1+ October 22, 2010U.S. Bank Interest Bearing Commercial Paper 200,000 S&P A-1+ March 21, 2011U.S. Bank Open IB Monthly Commercial Paper 140,021 S&P A-1+ OpenCorporate Bonds and Notes* 2,880,890 Various dates

Florida PRIME 3,200 S&P AAAmWeighted average of the

fund portfolio: 52 daysInvestment in Fund B Surplus Trust Fund 3,856 Not rated

Weighted average of the fund portfolio: 7.49 years

4,326,774$

* These investments include tradeable corporate certificates of deposit. As such, their values are affected by market conditions. The investments are covered by the FDIC.

Custodial risk – For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of the investments or collateral securities that are in the possession of an outside party. The District has no formal policy for custodial risk.

The money market mutual funds are not evidenced by securities that exist in physical or book entry form. The U.S. Treasury investments and commercial paper are held by the trustee or agent but not in the District’s name.

Credit risk – For investments, credit risk is generally the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Investment ratings by investment type are included in the preceding summary of investments.

Concentration risk – The District places no limit on the amount the District may invest in any one issuer.

Interest rate risk – The District does not have a formal policy that limits investment maturities as a means of managing exposure to fair value losses arising from increasing interest rates.

However, the Bond Indenture limits the type of investments held using unspent proceeds.

17

NOTE 5 – INTERFUND RECEIVABLES AND PAYABLES

Interfund receivables and payables at September 30, 2010 were as follows:

Fund Receivable PayableGeneral 15,017$ -$ Debt service - 15,017 Total 15,017$ 15,017$

The outstanding balances between funds result primarily from the time lag between the dates that transactions are recorded in the accounting system and payments between funds are made. In the case of the District, the balances relate to costs paid by the general fund on behalf of the debt service fund that have not been reimbursed at year end.

NOTE 6 – CAPITAL ASSETS

Capital asset activity for the fiscal year ended September 30, 2010 was as follows:

Beginning Balance Additions Reductions

Ending Balance

Governmental activitiesCapital assets, not being depreciated

Land 5,226,185$ -$ -$ 5,226,185$Land improvements 5,178,092 - - 5,178,092

Total capital assets, not being depreciated 10,404,277 - - 10,404,277

Capital assets, being depreciatedInfrastructure - drainage 10,396,500 - - 10,396,500

Total capital assets, being depreciated 10,396,500 - - 10,396,500

Less accumulated depreciation for:Infrastructure - drainage 1,732,750 346,550 - 2,079,300

Total accumulated depreciation 1,732,750 346,550 - 2,079,300

Total capital assets being depreciated, net 8,663,750 (346,550) - 8,317,200

Governmental activities capital assets, net 19,068,027$ (346,550)$ -$ 18,721,477$

Depreciation was charged to the maintenance and operations function.

NOTE 7 – LONG TERM LIABILITIES

On April 25, 2000 the District issued $27,315,000 of Special Assessment Bonds, Series 2000A due on May 1, 2031 with a fixed interest rate of 7.125%. The Bonds were issued to finance the acquisition and construction of certain improvements for the benefit of the District. Interest is to be paid semiannually on each May 1 and November 1. Principal is to be paid serially commencing May 1, 2002 through May 1, 2031.

The Series 2000A Bonds are subject to redemption at the option of the District prior to their maturity. The Bonds are subject to extraordinary mandatory redemption prior to their selected maturity in the manner determined by the Bond Registrar if certain events occurred as outlined in the Bond Indenture. This occurred during the current fiscal year as the District collected assessments from the lot owners and prepaid $35,000 of the Bonds. See Note 13 – Subsequent Event for additional call amounts subsequent to the fiscal year end.

The Bond Indenture established a debt service reserve requirement as well as other restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements. The District was in compliance with the requirements at September 30, 2010.

18

NOTE 7 – LONG TERM LIABILITIES (Continued)

Changes in long-term liability activity for the fiscal year ended September 30, 2010 were as follows:

Beginning Balance Additions Reductions

Ending Balance

Due Within One Year

Governmental activitiesBonds payable 24,015,000$ -$ 500,000$ 23,515,000$ 500,000$

At September 30, 2010, the scheduled debt service requirements on the long - term debt were as follows:

Year ending September 30: Principal Interest Total

2011 500,000$ 1,675,444$ 2,175,444$ 2012 540,000 1,639,819 2,179,819 2013 580,000 1,601,344 2,181,344 2014 620,000 1,560,019 2,180,019 2015 665,000 1,515,844 2,180,844

2016 - 2020 4,145,000 6,793,331 10,938,331 2021 - 2025 5,920,000 5,082,619 11,002,619 2026 - 2030 8,460,000 2,636,963 11,096,963

2031 2,085,000 148,556 2,233,556 23,515,000$ 22,653,939$ 46,168,939$

Governmental Activities

NOTE 8 – DEVELOPER TRANSACTIONS

The Developer owns a portion of the land within the District, therefore assessment revenues in the general and debt service funds include the assessments levied on those lots and unplatted lands owned by the Developer. During the fiscal year ended September 30, 2010, the Developer was directly billed and paid $204,031 to the general fund and $744,913 to the debt service fund.

The Developer contributed $3,182 to the capital projects fund for boundary amendment expenditures.

In addition, the District is considering refinancing its outstanding bonds and in a prior year approved an agreement for the Developer to fund the costs associated with investigating the Bond refinancing. The funds provided by the Developer are to be reimbursed if and when the refunding bonds are issued. In connection with this matter, as of September 30, 2010, the total due to Developer reported in the debt service fund was $20,013.

NOTE 9 – CONCENTRATION

The District’s activity is dependent upon the continued involvement of the Developer, the loss of which could have a material adverse effect on the District’s operations.

NOTE 10 – NET ASSETS (DEFICIT)

The District has a government-wide deficit net asset balance of ($845,764) as of September 30, 2010. There is no such deficit reflected in the governmental fund statements. The deficit relates primarily to the excess of the amount of long-term debt outstanding over the amount of capital assets owned and maintained by the District, net of accumulated depreciation.

19

NOTE 11 – MANAGEMENT COMPANY

The District has contracted with a management company to perform services which include financial and accounting advisory services. Certain employees of the management company also serve as officers of the District. Under the agreement, the District compensates the management company for management, accounting, financial reporting, computer and other administrative costs.

NOTE 12 – RISK MANAGEMENT

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The District has obtained commercial insurance from independent third parties to mitigate the costs of these risks; coverage may not extend to all situations. There have been no claims from these risks over the past three years.

NOTE 13 – SUBSEQUENT EVENTS

Bond PaymentsIn November 2010, the District prepaid $30,000 of the Series 2000 Bonds. The prepayment was an extraordinary mandatory redemption as outlined in the Bond Indenture.

20

POINCIANA COMMUNITY DEVELOPMENT DISTRICT POLK COUNTY, FLORIDA

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – GENERAL FUND

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010

Variancewith Final

Budgeted Budget -Actual Positive

Original & Final Amounts (Negative)

REVENUESAssessments 411,704$ 413,365$ 1,661$ Developer assessments 204,020 204,030 10 Miscellaneous revenue - 1,581 1,581 Interest income 100 3,808 3,708

Total revenues 615,824 622,784 6,960

EXPENDITURESCurrent:

General government 156,998 130,670 26,328Maintenance and operations 458,826 451,559 7,267

Total expenditures 615,824 582,229 33,595

Excess (deficiency) of revenues over (under) expenditures -$ 40,555 40,555$

Fund balance - beginning 280,012

Fund balance - ending 320,567$

Amounts

See notes to required supplementary information

21

POINCIANA COMMUNITY DEVELOPMENT DISTRICT POLK COUNTY, FLORIDA

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

The District is required to establish a budgetary system and an approved Annual Budget for the general fund. The District’s budgeting process is based on estimates of cash receipts and cash expenditures which are approved by the Board. The budget approximates a basis consistent with accounting principles generally accepted in the United States of America (generally accepted accounting principles).

The legal level of budgetary control, the level at which expenditures may not exceed budget, is in the aggregate. Any budget amendments that increase the aggregate budgeted appropriations must be approved by the Board of Supervisors. Actual general fund expenditures did not exceed appropriations for the fiscal year ended September 30, 2010.

The variance between budgeted and actual general fund revenues for the 2010 fiscal year was not considered significant. The actual general fund expenditures were lower than budgeted amounts due primarily to anticipated repair and maintenance work which was not required.

24

REPORT TO MANAGEMENT

I. CURRENT YEAR FINDINGS AND RECOMMENDATIONS

None

II. PRIOR YEAR FINDINGS AND RECOMMENDATIONS

None

III. COMPLIANCE WITH THE PROVISIONS OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA

Unless otherwise required to be reported in the auditor’s report on compliance and internal controls, the management letter shall include, but not be limited to the following:

1. A statement as to whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report.

There were no significant findings and recommendations made in the preceding annual financial audit report for the fiscal year ended September 30, 2009.

2. A statement as to whether or not the local governmental entity complied with Section 218.415, Florida Statutes, regarding the investment of public funds.

The District complied with Section 218.415, Florida Statutes, regarding the investment of public funds.

3. Any recommendations to improve the local governmental entity's financial management.

There were no such matters discovered by, or that came to the attention of, the auditor, to be reported for the fiscal year ended September 30, 2010.

4. Violations of provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but more than inconsequential.

There were no such matters discovered by, or that came to the attention of, the auditor, to be reported, for the fiscal year ended September 30, 2010.

5. For matters that have an inconsequential effect on the financial statements, considering both quantitative and qualitative factors, the following may be reported based on professional judgment:

a. Violations of provisions of contracts or grant agreements, fraud, illegal acts, or abuse.

b. Deficiencies in internal control that are not significant deficiencies.

There were no such matters discovered by, or that came to the attention of, the auditor, that, in our judgment, are required to be reported, for the fiscal year ended September 30, 2010.

6. The name or official title and legal authority of the District are disclosed in the notes to the financial statements.

7. The financial report filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes agrees with the September 30, 2010 financial audit report.

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REPORT TO MANAGEMENT (Continued)

8. The District has not met one or more of the financial emergency conditions described in Section 218.503(1), Florida Statutes.

9. We applied financial condition assessment procedures pursuant to Rule 10.556(7) and no deteriorating financial conditions were noted. It is management’s responsibility to monitor financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same.

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Appendix F

Consulting Engineer’s Report

[THIS PAGE INTENTIONALLY LEFT BLANK]

SECOND SUPPLEMENTAL ENGINEERING REPORT

POINCIANA COMMUNITY DEVELOPMENT DISTRICT

Prepared for:

Poinciana Community Development District 610 Sycamore Street

Suite 140 Celebration, Florida 34747

Prepared by:

482 South Keller Road Orlando, Florida 32810

March 13, 2012

TC-1

TABLE OF CONTENTS Page Table of Contents TC-1 List of Tables TC-2 List of Figures TC-3 Section Title 1 Introduction 1-1

1.1 Introduction 2 The Development Description

2.1 General 2-1

3 District's Proposed Improvements

3.1 General 3-1 3.2 District Improvements 3-1

3.2.1 Infrastructure 3-1 3.2.2 Ownership and Maintenance 3-4 3.2.3 Improvement Costs 3-4

3.3 Status of Permitting 3-4 3.4 Construction Status 3-4

4 Engineer's Certification

4-1 Engineer's Certification 4-1

TC-2

LIST OF TABLES Table Title Page 2-1 Poinciana Community Development District Estimated Lot Development Schedule 2-2 3-1 Poinciana Community Development District Improvement Costs 3-5

TC-3

LIST OF FIGURES Figure Title Page 1-1 Location Map 1-2 1-2 Solivita Master Plan 1-3

1-1

Section 1 INTRODUCTION

1.1 INTRODUCTION

The community called Solivita is approximately 4,187 acres and is comprised of two separate and distinct Community Development Districts, namely, Poinciana Community Development District and Poinciana West Community Development District. These districts are adjacent to each other. The Poinciana Community Development District, hereafter referred to as the “District”, the subject of this report, encompasses a 3,240 acre mixed-use development located in northeast corner of Polk County as shown on Figure 1-1. Solivita is an active adult community consisting of villages and neighborhoods for single-family and multi-family dwellings, town center, golf courses and numerous parks and recreation facilities. Future phases of Solivita are owned by Avatar Properties, Inc., the Developer. The District was established by rule of the Florida Land and Water Adjudicatory Commission effective November 1, 1999, pursuant to the provisions of Chapter 190, Florida Statutes. The District provides an efficient mechanism for managing and financing the public infrastructure associated with the planning and development of Solivita. On April 14, 2000 the District issued its Special Assessment Bonds, Series 2000A (the “Series 2000A Bonds”), in the amount of $27,315,000. The proceeds from the Series 2000A Bonds were used for financing the acquisition and construction of infrastructure development including stormwater management facilities, wetland (environmental) compliance, potable water distribution systems, sewage (wastewater collection) system, reuse water distribution system and offsite utility improvements needed. The District’s development boundary was later amended to include approximately 212 additional acres located at the southeast corner of the intersection of Cypress Parkway and Marigold Avenue. Three (3) lots from this area were omitted from the District, these three lots benefit from any District improvements and the assessments were paid by the Developer. This Second Supplemental Engineer’s Report dated February 2012 supplements and amends the First Supplement Engineer’s Report dated May 2008, which is a supplement to the previously adopted Engineer’s Report dated January 3, 2000. The purpose of this report is to update the First Supplemental Engineer’s Report for the purpose of refinancing of the Series 2000A Bonds. Development of the lands within the District have been completed in phases. Figure 1-2 illustrates the current Master Plan for the project. The phases which remain to be completed include Phase 5, 5D, 5E (W), 1G, 1H, 1C, 1F and 5E (S). It is anticipated the remainder of the District’s capital improvement projects will be funded by the Developer. This project will continue to require permits for Phases 5, 5D, 5E(W), 1G, 1H, 1C, 1F and 5E (S) through federal, state and local agencies. On February 18, 2005 Phases 5, 1C, 1F, 1G, and 1H, receive Planned Development approval of the Major Modification Binding Site Plan through Polk County, Florida.

Poinciana CDDBoundary

Figure 1-2 Solivita Master Plan

Phase 1HPhase V

Phase1G

Phase 1C

Phase 1F

2-1

Section 2 THE DEVELOPMENT DESCRIPTION

2.1 GENERAL

The District, pursuant to the provisions of Chapter 190, Florida Statutes, was established by rule of the Florida Land and Water Adjudicatory Commission effective November 1, 1999. The District consists of, after the 2008 boundary amendment, approximately 3,240 acres. Approximately 1,267 acres are existing connected and isolated wetlands. The lot development schedule for the land within the District is provided in Table 2-1. All future lot development assumptions were provided by the Developer.

The portion of Solivita within the District consists of several villages inspired by community based design principles and includes single and multi-family residences, central community recreation complex, neighborhood recreation areas, commercial town center area, golf course and various biking and pedestrian trails. The master plan for the remaining phase is shown on Figure 1-2. In general, the development program within the District limits consists of approximately 4,237 residential units, an18-hole golf courses and 128,000 square feet of other non-residential space.

The Engineer’s Report dated January 3, 2000 for the Special Assessment Bonds, Series 2000A specified that “…the overall development program may include as many as 6,500 residential units …”, that is, the entire Solivita Development including the land encompassing the District and the lands encompassing the Poinciana West Community Development District. At present, the lands within the District (Phases I through VI) are planned to include 4,237 residential and 72 non-residential units, totaling 4,309 units (see Table 2-1). Note these 72 “non-residential units” are equivalent residential units (ERUs) which reflect the conversion of non-residential square footage to ERUs. Phase VII, although part of the entire Solivita Development, is part of the Poinciana West Community Development District, a separate and distinct district on its own whose costs and residential units are not included in this report.

Table 2-1Poinciana Community Development District

Estimated Lot Development Schedule

ResidentialThrough FY2011 2012 2013 2014 2015 2016 2017 2018 2019 Total

Single Family

Phase 1 550 550Phase 2 693 693Phase 3 507 507Phase 4 698 698Phase 5 170 242 241 653Phase 5D - Townhome 148 148Phase 5E(W) - Duplex 74 74Phase 6 219 219Multi-Family

Phase 1G 0 42 42Phase 1H 180 180Phase 1C 112 112Phase 1F 246 246Phase 5E(S) 0 112 112

Subtotal 2,837 0 42 74 422 241 148 224 246 4,234

Non-Residential Town Center Commercial (sf) 110,000 110,000Other Commercial (sf) 18,000 18,000

Subtotal 128,000 128,000Total ERUs* 72 72

Total Units/ERUs 2,909 0 42 74 422 241 148 224 246 4,306

Notes:

*Non-residential ERUs based on 1,774 sq.ft per ERU

Lot development is defined as lot construction completed, not lot sale to homeowner

3 lots in Phase 6 were platted but are not part of the District. Those 3 lots are not reflected in the totals above

3-1

Section 3 PROPOSED IMPROVEMENTS

3.1 GENERAL The infrastructure improvements for the land within the District include, but may not necessarily be limited to, the following:

• Stormwater Management Facilities • Wetland (environmental) compliance • Potable (domestic) water distribution system • Sewage (wastewater/sanitary) sewer collection system • Reuse (reclaimed) water distribution system • Off-site utility improvements

Pursuant to the Engineer’s Report dated January 3, 2000 (the “Engineer’s Report”), the total cost of the infrastructure improvements was estimated to be $69,866,000 which included offsite roadways, stormwater management facilities and related earthwork, drainage structures, mitigation creation, mitigation area and stormwater area acquisition, utility mains, utility plant improvements and wastewater, potable water system and reuse facilities (the “Capital Improvement Program” or CIP). A portion of the proceeds of the Series 2000 Bonds were used to acquire and construct a portion of the District CIP (the “2000 Project”). The First Supplemental Engineer’s Report dated May 2008 supplemented and amended the Engineer’s Report and CIP restating the total cost for the infrastructure improvements estimated to be $85,346,203. This Second Supplemental Engineer’s Report dated March 2012 supplements information from the CIP from the First Supplement Engineer’s Report and amends the Engineer’s Report. The March 2012 CIP total cost for infrastructure improvements completed to date and yet to be completed is estimated to be $81,335,751. It is anticipated the remainder of the District’s CIP will be funded by the Developer. 3.2 DISTRICT IMPROVEMENTS 3.2.1 Infrastructure The infrastructure improvements benefit and provide service to the land within the District. Infrastructure improvements included offsite roadways, stormwater management facilities and related earthwork, drainage structures, mitigation creation, mitigation area and stormwater area acquisition, utility mains, utility plant improvements and wastewater, potable water system and reuse facilities. The infrastructure improvements are complete in the District with the exception of Phases 5, 5D, 5E(W), 1G, 1H, 1C, 1F and 5E (S) which are left to be completed.

3-2

Stormwater Management Facilities The existing stormwater system is shown in Figure 3-1. The stormwater system has been developed in accordance with an approved Stormwater Master Plan to assure that adequate stormwater management facilities are available. The stormwater system is complete with the exception of Phases 5, 5D, 5E(W), 1G, 1H, 1C, 1F and 5E (S). Phases 5, 5D, 5E(W), 1G, 1H, 1C, 1F and 5E (S) will be developed consistent with other developed phases of the project, and will be required to meet the regulatory requirements applicable to the Development, as listed below:

• U. S. Environmental Protection Agency (EPA) • U. S. Army Corps of Engineers (ACOE) • Florida Department of Environmental Protection (FDEP) • South Florida Water Management District (SFWMD) • Polk County, Florida

For Phases 5, 5D, 5E(W), 1G, 1H, 1C, 1F and 5E (S), and consistent with the rest of the District, it is anticipated the removal of surface drainage from the roadways will be accomplished by storm sewer systems including curb and gutter, inlets and pipes along each side of the roadways that will collect and convey surface drainage to stormwater retention ponds located along the roadways. Protection of the road base material from undermining will be accomplished by underdrain systems as needed along each side of the roadways. The underdrain system will bleed off excess groundwater and discharge to the roadside storm sewer system. The costs of the stormwater management facilities include clearing, earthwork operations to ensure a functioning stormwater system, drainage structures, wetland mitigation areas and land acquisition costs.

Utilities

General: Acquisition of the primary infrastructure improvements identified as potable water, sewage and reuse water has been completed by the District for all phases except future Phases 5, 5D, 5E(W), 1G, 1H, 1C, 1F and 5E (S). Potable water, sewage and reuse water is supplied by the Toho Water Authority. Design and construction of the utilities has been consistent with the Development Master Utility Plan (MUP), which was prepared to determine the necessary potable water, sewage and reuse water infrastructure to meet the utility demands for the build out of the remaining Phases 5, 5D, 5E(W), 1G, 1H, 1C, 1F and 5E (S). The primary utility improvements include potable water, sewage and reclaimed water. Potable Water: The potable water infrastructure mains range in size from 6" through 24" in diameter. All new potable water mains will be looped and in accordance with the requirements of the Florida Department of Environmental Protection and Toho Water Authority and include the appurtenant fittings, meters, valves, and valve boxes to effect service.

3-3

Sewage: All new central sewage (raw wastewater) collection and transmission systems continue to be installed within the roadways. The systems will include a series of manifold pumps and lift stations. Each pump and/or lift station will collect the sewage within its service area (generally a specific village or portion thereof). The primary infrastructure includes force mains, ranging in size from 6" though 16"; pump and lift stations, including telemetry, as well as the appurtenant fittings, valves, and flow meters required to connect the primary infrastructure to the Toho Water Authority wastewater system. Reclaimed Water: All new reclaimed water systems will deliver reuse water for irrigation via a looped distribution system located within the roadways. The reclaimed water main piping system includes pipes, ranging in size from 4" to 16” in diameter. The system has been designed to accommodate the peak irrigation demands for the residential development.

3.2.2 Infrastructure Maintenance The maintenance responsibilities for the infrastructure improvements to the lands vary by the improvement as noted in the table below:

Improvement

Infrastructure Maintenance

Stormwater Management System Poinciana CDD

Sewage (Wastewater) Collection and Transmission System

Toho Water Authority

Potable Water Distribution System Toho Water Authority

Reclaimed Water Distribution System HOA

Offsite Treatment Plant Improvements Toho Water Authority

3.2.3 Improvement Costs The infrastructure improvements may be divided into several construction/acquisition packages. Those packages consist of the roadway, stormwater management, on-site utility systems and off-site improvements. The total updated costs for the public improvements in the District are estimated to be $81,335,751. A summary of the costs by improvement is shown in Table 3-1.

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3.3 STATUS OF PERMITTING Phases 5, 5D, 5E(W), 1G, 1H, 1C, 1F and 5E(S) infrastructure remains to be complete. It is our opinion that there are no technical reasons existing at this time which would prohibit the implementation of the plans as presented herein and that all permits not heretofore issued and which are necessary to effect the improvements described herein will be obtained during the ordinary course of development. 3.4 CONSTRUCTION STATUS Construction of the roadway, earthwork, drainage, and potable water, sewage (wastewater), and reuse water systems for Phases 5, 5D, 5E(W), 1G, 1H, 1C, 1F and 5E(S) are planned for future development. All other infrastructure has been completed.

Table 3-1The District Improvement Costs

Project Cost Spent through 2011 and Estimated Projected Costs for Future Phases

ThroughINFRASTRUCTURE ITEMS FY 2011 2012 2013 2014 2015 2016 2017 2018 2019 TotalDRAINAGERoadways (1) $799,047 $0 $0 $0 $0 $0 $0 $0 $0 $799,047Stormwater Management Facilities & Earthwork $30,570,582 $0 $164,914 $576,371 $2,128,669 $1,823,128 $849,340 $568,600 $709,139 $37,390,744Mitigation Creation $380,494 $0 $0 $0 $0 $0 $0 $0 $0 $380,494Subtotal $31,750,123 $0 $164,914 $576,371 $2,128,669 $1,823,128 $849,340 $568,600 $709,139 $38,570,285

UTILITIESOffsite Utility mains $84,060 $0 $0 $0 $0 $0 $0 $0 $0 $84,060Offsite Plant Improvements $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Wastewater (Sewage) System $8,909,506 $0 $31,204 $141,081 $772,533 $627,864 $115,992 $252,995 $242,548 $11,093,723Potable Water System $5,947,465 $0 $46,194 $119,343 $778,250 $588,332 $162,948 $308,168 $290,778 $8,241,477Reuse (Irrigation) Water System $1,535,049 $0 $6,299 $15,961 $171,317 $146,338 $12,987 $42,042 $41,945 $1,971,937Florida Power Relocation/Underground Power $2,888,479 $0 $0 $18,416 $55,178 $55,178 $14,985 $22,230 $0 $3,054,466Utility Capacity Fees (2) $7,449,208 $0 $0 $0 $0 $0 $0 $0 $0 $7,449,208Subtotal $26,813,768 $0 $83,697 $294,801 $1,777,277 $1,417,711 $306,912 $625,435 $575,270 $31,894,871

Professional Fees $8,224,339 $0 $39,690 $48,285 $211,635 $94,185 $48,285 $146,160 $160,515 $8,973,094

Contingency $0 $43,245 $137,919 $617,637 $500,254 $180,681 $201,029 $216,739 $1,897,503

Totals $66,788,229 $0 $288,301 $919,457 $4,117,581 $3,335,024 $1,204,537 $1,340,195 $1,444,924 $81,335,751

NOTES: Phases 5, 5D, 5E(W), 1G, 1H, 1C, 1F and 5E(S) remain to complete(1) Cypress Parkway improvements from Marigold Ave. to Solivita entrance.(2) Future utility capacity fees have already been funded

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Section 4 ENGINEER'S CERTIFICATION 4.1 ENGINEER'S CERTIFICATION The infrastructure improvements as detailed herein are necessary for the functional development of the District as required by the applicable independent unit of local government. The planning and design of the infrastructure is in accordance with current governmental regulatory requirements. The infrastructure will provide the intended function so long as the construction is in substantial compliance with the design and permits. The Engineer recommends that in addition to the annual non-ad valorem assessments to be levied and collected to pay debt service on the proposed bonds, the District should levy and collect an annual “Operating and Maintenance Fee”. Said fee is to be determined, assessed and levied by the District’s Board of Supervisors upon the assessable real property within the District for the purpose of defraying the cost and expenses of maintaining District-owned improvements. It is my professional opinion that the costs provided herein for the District’s proposed infrastructure improvements are reasonable to complete the construction of the proposed infrastructure improvements described herein and that these infrastructure improvements will benefit and add value to the District as more fully detailed in the Assessment Methodology Report. All such proposed infrastructure costs are public improvements or community facilities as set forth in Section 190.012(1) and (2) of the Florida Statutes. The estimate of infrastructure construction costs is only an estimate and not a guarantee maximum price. A portion of the costs are based on actual costs received by Avatar Properties, Inc. Where necessary, historical costs, information from other professional or utility consultants and contractors have been used in preparation of this report. Consultants and contractors who have contributed in providing the cost data included in this report are reputable entities within the area. It is therefore our opinion that the construction of the proposed Development can be completed at the stated costs. The labor market, future costs of equipment and materials, increased regulatory actions and the actual construction process are all beyond control. Due to this inherent opportunity for fluctuation in cost, the total final cost may be more or less than this estimate. Kathleen S. Leo, P.E. State of Florida Registration No. 51419 Atkins

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