New Issue - Book-Entry Only NOT RATED(See “Absence of Ratings” herein)

In the opinion of Bond Counsel with respect to the Series 2003A Bonds, assuming compliance with certain tax covenants, interest onthe Series 2003A Bonds from gross income for federal in come tax purposes under existing statutes, regulations, rulings and court decisions.Interest on the Series 2003A Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed onindividuals and corporations. However, see “Tax Matters” herein for a description of the federal alternative minimum tax on corporationsand certain other federal tax consequences of ownership of the Bonds. Bond Counsel is further of the opinion that the Series 2003A Bondsand the interest thereon are exempt from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed byChapter 220, Florida Statutes, on interest, income or profits on debt obligations owned by corporations as defined in Chapter 220.

CELEBRATIONCOMMUNITY DEVELOPMENT DISTRICT

(Osceola County, Florida)$6,035,000

Special Assessment BondsSeries 2003A

Dated: February 15, 2003 Due: May 1 (as shown below)

The Celebration Community Development District Special Assessment Bonds, Series 2003A (the “Series 2003A Bonds”) are issuable in fullyregistered form, without coupons, in denominations of $5,000 and integral multiples in excess thereof; provided, however, that the Series 2003ABonds will be offered to initial purchasers only in aggregate principal amounts in excess of $100,000. The Series 2003A Bonds will bear interestat the fixed rates set forth on the inside cover hereof, calculated on the basis of a 360-day year comprised of twelve thirty-day months, payable semi-annually on each May 1 and November 1, commencing May 1, 2003. The Series 2003A Bonds, when issued, will be registered in the name of Cede& Co., as bondowner and nominee for The Depository Trust Company (“DTC”), New York, New York. Purchases of beneficial interests in the Series2003A Bonds will be made in book-entry only form. Accordingly, principal of and interest on the Series 2003A Bonds will be paid by SunTrust Bank,Orlando, Florida, as trustee (the “Trustee”) directly to DTC as the registered owner thereof. Disbursements of such payments to the DTCParticipants is the responsibility of DTC and disbursements of such payments to the beneficial owners is the responsibility of DTC Participants andthe Indirect Participants, as more fully described herein. Any purchaser as a beneficial owner of a Series 2003A Bond must maintain an accountwith a broker or dealer who is, or acts through, a DTC Participant to receive payment of the principal of and interest on such Series 2003A Bond.See “Description of the Bonds - Book-Entry Only System” herein.

The Series 2003A Bonds are being issued by the Celebration Community Development District (the “District”) under and pursuant to theUniform Community Development District Act of 1980, Chapter 190, Florida Statutes, as amended (the “Act”) and a Master Trust Indenture, datedas of June 15, 1994 (the “Master Indenture”), from the District to the Trustee, as amended and supplemented by an Seventh Supplemental TrustIndenture, dated as of February 15, 2003 (the “Seventh Supplemental Indenture”), each from the District to the Trustee (the Master Indenture,as amended and supplemented is hereinafter referred to as the “Indenture”).

The Series 2003A Bonds are being issued for the purposes of financing the cost of acquiring, constructing and equipping a portion of certainassessable capital improvements comprising the development of South Village 2 of the community known as “Celebration” (the “Development”)(as more particularly described herein, the “2003A Project”), to make a deposit into the Debt Service Reserve Account securing only the Series2003A Bonds, paying costs of issuance, and funding capitalized interest with respect to the Series 2003A Bonds. The land within South Village 2of Celebration is owned by St. Joe Residential Acquisitions Inc., a Florida corporation (the “Landowner”) and is being developed by St. Joe/ArvidaCompany, L.P. (“Arvida” or the “Developer”). See “The Landowner and the Developer” herein. For a description of Celebration and the ArvidaDevelopment within Celebration, see “The Development” herein.

The Series 2003A Bonds are separately, equally and ratably secured under the Indenture by a lien upon and pledge of the Pledged Revenuespledged to the Series 2003A Bonds (as more particularly defined in the Indenture) comprised primarily of special assessments upon land withinthe District specially benefitted by the 2003A Project funded with the proceeds of the Series 2003A Bonds (the “2003A Special Assessments”),together with certain moneys on deposit in the Funds and Accounts established under the Indenture for the benefit of the Series 2003A Bonds.

The Series 2003A Bonds is subject to optional, extraordinary mandatory and mandatory sinking fund redemption prior tomaturity at the times, upon the terms and conditions and at the redemption prices, as more fully described herein under thecaption “Description of the Series 2003A Bonds - Redemption Provisions.”

INVESTMENT IN THE SERIES 2003A BONDS IS NOT SUITABLE FOR ALL INVESTORS, POTENTIAL INVESTORS ARESOLELY RESPONSIBLE FOR EVALUATING THE MERITS AND RISKS OF AN INVESTMENT IN THE SERIES 2003A BONDS.SEE “SUITABILITY FOR INVESTMENT’ HEREIN.

NEITHER THE SERIES 2003A BONDS NOR THE INTEREST AND PREMIUM, IF ANY, PAYABLE THEREON SHALLCONSTITUTE A GENERAL OBLIGATION OR GENERAL INDEBTEDNESS OF THE DISTRICT WITHIN THE MEANING OF THECONSTITUTION AND LAWS OF FLORIDA. THE SERIES 2003A BONDS AND THE INTEREST AND PREMIUM, IF ANY, PAYABLETHEREON DO NOT CONSTITUTE EITHER A PLEDGE OF THE FULL FAITH AND CREDIT OF THE DISTRICT OR A LIEN UPONANY PROPERTY OF THE DISTRICT OTHER THAN AS PROVIDED IN THE INDENTURE. NO OWNER OR ANY OTHER PERSONSHALL EVER HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY AD VALOREM TAXING POWER OF THE DISTRICT ORANY OTHER PUBLIC AUTHORITY OR GOVERNMENTAL BODY, INCLUDING THE STATE OF FLORIDA OR OSCEOLA COUNTY,FLORIDA TO PAY THE PRINCIPAL OF, OR INTEREST AND PREMIUM, IF ANY, ON THE SERIES 2003A BONDS OR TO PAY ANYOTHER AMOUNTS REQUIRED TO BE PAID PURSUANT TO THE INDENTURE OR THE SERIES 2003A BONDS. RATHER, ALLSUCH AMOUNTS SHALL BE PAYABLE SOLELY FROM, AND SHALL BE SECURED SOLELY BY, THE TRUST ESTATE PLEDGEDTO THE SERIES 2003A BONDS (AS DEFINED IN THE INDENTURE) ALL AS PROVIDED THEREIN.

$6,035,000 6.40% Term Bonds maturing May 1, 2034 -- at 100% CUSIP:151001DF8(Plus Accrued Interest from February 15, 2003)

The Series 2003A 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 legality by Greenberg Traurig, P.A., Miami, Florida, BondCounsel, as to the validity of the Bonds and the excludability of interest thereon from gross income for federal income tax purposes. Certain legalmatters will be passed upon for the Underwriter by their counsel Nabors, Giblin & Nickerson, P.A., Tampa, Florida; for the District by its counsel,Hopping Green & Sams, Professional Association, Tallahassee, Florida; and for the Trustee by its counsel, Holland & Knight LLP, Orlando, Florida.It is expected that the Bonds will be delivered in book-entry form through the facilities of The Depository Trust Company, New York, New York onor about February 27, 2003.

February 19, 2003PRAGER, SEALY & CO., LLC

CELEBRATION COMMUNITY DEVELOPMENT DISTRICT

BOARD OF SUPERVISORS

Hal McIntyre, ChairmanLinda Goodwin-Nichols, Vice Chair

Steven D. Katz, SecretaryEva TukdarianDavid Muenks

DISTRICT MANAGER

Severn Trent Services, Inc.

DISTRICT COUNSEL

Hopping Green & Sams, Professional AssociationTallahassee, Florida

BOND COUNSELGreenberg Traurig, P.A.

Miami, Florida

COUNSEL TO THE UNDERWRITER

Nabors, Giblin & Nickerson, P.A.Tampa, Florida

DISTRICT ENGINEERS

PBS&JOrlando, Florida

FINANCIAL CONSULTANT

Rizzetta & Company, IncorporatedTampa, Florida

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No dealer, broker, salesperson or other person has been authorized by the Celebration CommunityDevelopment District or the Underwriter to give any information or to make any representations, otherthan those contained in this Limited Offering Memorandum, and, if given or made, such otherinformation or representations must not be relied upon as having been authorized thereby. ThisLimited Offering Memorandum does not constitute an offer to sell or the solicitation of an offer to buy,nor shall there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful forsuch person to make such offer, solicitation or sale. The information and expressions of opinion hereinare subject to change without notice, and neither the delivery of this Limited Offering Memorandumnor any sale made hereunder shall, under any circumstances, create any implication that there hasbeenno change in the affairs of the Celebration Community Development District since the date hereof.

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

Table of Contents

Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Description of the Series 2003A Bonds . . . . . . . . . . . . 4General Description . . . . . . . . . . . . . . . . . . . . . . . . . 4Redemption Provisions of The Series

2003A Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 5Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . 7Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Book-Entry Only System . . . . . . . . . . . . . . . . . . . . 8Flow of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Security for and Source of Payment of the Series2003A Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13No Additional Bonds; Parity Liens of Other

Assessments and Taxes . . . . . . . . . . . . . . . . 14Overlapping Assessments . . . . . . . . . . . . . . . . . . 14Enforcement and Collection of Assessments

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Prepayment of Assessments . . . . . . . . . . . . . . . 18Adjustments to Assessments . . . . . . . . . . . . . . . 18Assessment Methodology . . . . . . . . . . . . . . . . . 19Reserve Account in the Debt Service Reserve

Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

The 2003A Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Permits and Approvals . . . . . . . . . . . . . . . . . . . . . 22Repayment of Certain Obligations to the

Developer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Page

Estimated Sources and Uses of Funds . . . . . . . . . . . 23

Principal and Interest Requirements Series 2003ABonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

The District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25General Information . . . . . . . . . . . . . . . . . . . . . . . . 25Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Board of Supervisors . . . . . . . . . . . . . . . . . . . . . . 25The District Manager . . . . . . . . . . . . . . . . . . . . . . 26Outstanding Bonds . . . . . . . . . . . . . . . . . . . . . . . . 27

The Arvida Development Within Celebration . . . . . 28

The Landowner and the Developer . . . . . . . . . . . . . . 33

Bondholders' Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Suitability for Investment . . . . . . . . . . . . . . . . . . . . . . . 40

Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Agreement by the State . . . . . . . . . . . . . . . . . . . . . . . . 41

Legality for Investment . . . . . . . . . . . . . . . . . . . . . . . . 42

Disclosure Required by Florida Blue Sky Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Continuing Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 42

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Page

Enforceability of Remedies . . . . . . . . . . . . . . . . . . . . . 43

Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Absence of Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Appendices:

Appendix A - Engineering Report

Appendix B - Forms of Master Indentureand

Supplemental Indenture

Appendix C - Form of Opinion of BondCounsel

Appendix D - F o r m o f C o n t i n u i n gDisclosure Agreement

Appendix E - S p e c i a l A s s e s s m e n tAllocation Report

Appendix F - A u d i t e d F i n a n c i a lStatements of the Districtfo r the yea r endedSeptember 30, 2001

Limited Offering MemorandumCELEBRATION

COMMUNITY DEVELOPMENT DISTRICT(Osceola County, Florida)

$6,035,000Special Assessment Bonds

Series 2003A

Introduction

The purpose of this Limited Offering Memorandum, including the cover page andappendices hereto, is to set forth certain information concerning the Celebration CommunityDevelopment District (the "District"), in connection with the offering and issuance of its CelebrationCommunity Development District Special Assessment Bonds, Series 2003A (the "Series 2003ABonds"). The District was created pursuant to the Uniform Community Development District Actof 1980, Chapter 190, Florida Statutes, as amended (the "Act"), as a community developmentdistrict. The Series 2003A Bonds are being issued by the District under and pursuant to the UniformCommunity Development District Act of 1980, Chapter 190, Florida Statutes, as amended (the"Act") and a Master Trust Indenture, dated as of June 15, 1994 (the "Master Indenture"), from theDistrict to the Trustee, as amended and supplemented by a Seventh Supplemental Trust Indenture,dated as of February 15, 2003 (the "Seventh Supplemental Indenture"), each from the District to theTrustee (the Master Indenture, as amended and supplemented is hereinafter referred to as the"Indenture").

The District was established by Rule 42Q, adopted by the Florida Land and WaterAdjudicatory Commission (the "Commission") on March 8, 1994 and effective on March 29, 1994,under the provisions of the Act for the purposes of financing and managing the planning,acquisition, construction, maintenance and operation of a portion of the infrastructure necessary forcommunity development in a portion of Celebration, a planned community being developed inOsceola County, Florida ("Celebration") by The Celebration Company ("The CelebrationCompany"), a wholly-owned subsidiary of The Walt Disney Company. The District occupiesapproximately 6,548 acres.

Celebration has received development approval to construct up to 8,065 apartments,townhouses and single family homes as well as commercial buildings contiguous to the Walt DisneyWorld Resort over its anticipated development period.

Community development activities within Celebration are shared with EnterpriseCommunity Development District (the "Enterprise District"), a community development districtestablished pursuant to the Act by Rule 42R, also adopted by the Commission on March 8, 1994 andeffective on March 29, 1994. The Act authorizes the District to issue bonds for the purpose, amongothers, of financing, funding, planning, establishing, acquiring, constructing or reconstructing,enlarging or extending, equipping, operating and maintaining water management, water supply,

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sewer, wastewater management, bridges or culverts, district roads, street lights and any other basicinfrastructure projects within or without the boundaries of the District.

The Series 2003A Bonds are being issued for the purposes of financing and refinancing thecost of acquiring, constructing and equipping a portion of certain assessable capital improvementscomprising the development of Phase V/South Village 2 ("PhaseV/South Village 2" or "SouthVillage2") of the community known as "Celebration" (the "Development") (as more particularlydescribed herein, the "2003A Project"), to make a deposit into the Debt Service Reserve Accountsecuring only the Series 2003A Bonds, paying costs of issuance, and funding capitalized interestwith respect to the Series 2003A Bonds. The land within South Village 2 of Celebration is ownedby St. Joe Residential Acquisitions Inc., a Florida corporation (the "Landowner") and is beingdeveloped by St. Joe/Arvida Company, L.P. ("Arvida" or the "Developer"). See "The Landownerand the Developer" herein. For a description of Celebration and the Arvida Development withinCelebration, see "The Development" herein.

The Series 2003A Bonds are separately, equally and ratably secured under the Indenture bya lien upon and pledge of the Pledged Revenues pledged to the Series 2003A Bonds (as moreparticularly defined in the Indenture) comprised primarily of special assessments upon land withinthe District specially benefitted by the 2003A Project funded with the proceeds of the Series 2003ABonds (the "2003A Special Assessments"), together with certain moneys on deposit in the Fundsand Accounts established under the Indenture for the benefit of the Series 2003A Bonds.

Except as provided in the Indenture, no additional bonds or other obligations may be issuedon parity with the Series 2003A Bonds or have a senior lien on the Series 2003A Assessmentspledged thereto and other assets pledged under the Indenture as security for the Series 2003A Bonds(see "Security for and Source of Payment of Bonds," herein). ALTHOUGH THE LIEN AND THEPROCEEDS OF THE ASSESSMENTS PLEDGED TO THE SERIES 2003A BONDS AREPLEDGED EXCLUSIVELY TO THE SERIES 2003A BONDS, THE LIEN OF THE SERIES2003A ASSESSMENTS MAY BE ON THE SAME PROPERTY AS, AND THEREFOREOVERLAP AND BE CO-EQUAL WITH, THE LIEN OF FUTURE ASSESSMENTS RELATEDAND PLEDGED TO OTHER SERIES OF BONDS HEREAFTER ISSUED BY THE DISTRICTTO FINANCE THE BALANCE OF THE COSTS OF THE ASSESSABLE CAPITALIMPROVEMENTS COMPRISING THE DEVELOPMENT OF PHASE V/SOUTH VILLAGE 2NOT FINANCED WITH THE PROCEEDS OF THE SERIES 2003A BONDS (HEREINAFTERDESCRIBED) AND THE LIENS OF OTHER ASSESSMENTS WHICH MAY BE IMPOSED BYOSCEOLA COUNTY, FLORIDA OR OTHER UNITS OF LOCAL GOVERNMENT HAVINGASSESSMENT POWERS WITHIN THE DISTRICT AND WILL ALSO BE CO-EQUAL WITHTHE LIEN OF SUCH DISTRICT, COUNTY, SCHOOL DISTRICT AND MUNICIPAL ADVALOREM TAXES AND ASSESSMENTS (see the information under the subcaptions"Enforcement and Collection of Assessments" and "Overlapping Assessments" under the principalcaption "Security for and Source of Payment of the Series 2003A Bonds").

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The Series 2003A Bonds are the seventh Series of Bonds to be issued under the MasterIndenture. For a summary of other Outstanding Bonds of the District see, the material appearingunder the caption "The District - Outstanding Bonds" herein.

The Series 2003A Bonds are payable from and secured by special assessments on propertyspecially benefitted by the respective projects financed by the Series 2003A Bonds. All capitalizedterms used in this Limited Offering Memorandum that are defined in the Indenture and not definedherein shall have the respective meanings set forth in the Indenture, the form of which appears asAppendix B hereto.

Investment in the 2003A Bonds involve certain risks. See "BONDHOLDERS' RISKS" and"SUITABILITY FOR INVESTMENT" herein.

Pursuant to Florida law, this offering is limited by the Underwriter to "accredited investors"within the meaning of the rules of the Florida Department of Banking and Finance. This limitationof the initial offering to accredited investors does not denote restrictions on transfer in any secondarymarket for the Series 2003A Bonds. Potential investors are solely responsible for evaluating themerits and risks of an investment in the Series 2003A Bonds. See "SUITABILITY FORINVESTMENT" herein.

There follows in this Limited Offering Memorandum a brief description of the District, the2003A Project to be planned, acquired, financed, constructed and equipped with the proceeds of theSeries 2003A Bonds, together with summaries of the terms of the Series 2003A Bonds, theIndenture and certain provisions of the Act. All references herein to the Indenture and the Act arequalified in their entirety by reference to such documents and all references to the Series 2003ABonds are qualified by reference to the definitive forms thereof and the information with respectthereto contained in the Indenture, the form of which appears as Appendix B hereto. Theinformation herein under the caption "Celebration" has been furnished specifically for inclusionherein by the District Engineer, the Landowner and the Developer without independent investigationby the District or the Underwriter, and neither the District nor the Underwriter makes anyrepresentation or warranty concerning the accuracy or completeness of such information. NeitherThe Landowner, the Developer nor any of their respective affiliates makes any representation orwarranty as to the accuracy or completeness of information contained herein which has beenfurnished by any other party to the transactions contemplated hereby. This Limited OfferingMemorandum, is not, and shall not be deemed to constitute, an offer to sell, or the solicitation of anoffer to buy, real estate, which may only be made pursuant to offering documents satisfyingapplicable federal and state laws relating to the offer and sale of real estate.

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Description of the Series 2003A Bonds

General Description

The Series 2003A Bonds are issuable as fully registered Series 2003A Bonds in book-entryonly form (see "Description of the Series 2003A Bonds - Book-Entry Only System"), withoutcoupons, in the denomination of $5,000 or any integral multiple thereof.

The Series 2003A Bonds will be dated February 15, 2003, and, will bear interest from theInterest Payment Date next preceding their date of registration and authentication, unless any suchSeries 2003A Bond is registered and authenticated as of an Interest Payment Date, in which case itwill bear interest from such Interest Payment Date, or unless a Series 2003A Bond is registered andauthenticated prior to the first Interest Payment Date, in which event such Series 2003A Bond willbear interest from its dated date, provided, however, that if a Bond is authenticated between a recorddate and the next succeeding Interest Payment Date, such Bond will bear interest from suchsucceeding Interest Payment Date, or unless, as shown by the records of the Trustee, interest on theSeries 2003A Bonds is in default in which event such Series 2003A Bond will bear interest from thedate to which interest was last paid on such Series 2003A Bond to maturity or earlier redemption.

The Series 2003A Bonds will be initially issued in the form of a separate single certificatedfully registered Series 2003A Bond for each maturity. Upon initial issuance, the ownership of eachsuch Series 2003A Bond will be registered in the registration books kept by the Trustee in the nameof Cede & Co., as Nominee of The Depository Trust Company, New York, New York ("DTC"), theinitial Bond Depository. All of the Outstanding Series 2003A Bonds will be registered in theregistration books kept by the Trustee in the name of Cede & Co., as Nominee of DTC (see"Description of the Series 2003A Bonds - Book-Entry Only System").

With respect to Series 2003A Bonds registered in the registration books kept by the Trusteein the name of Cede & Co., as Nominee of DTC, the District, the Trustee and the Paying Agent willhave no responsibility or obligation to any DTC Participant (hereinafter defined) or to any indirectDTC Participant. Without limiting the immediately preceding sentence, the District, the Trustee andthe Paying Agent will have no responsibility or obligation with respect to: (i) the accuracy of therecords of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in theSeries 2003A Bonds; (ii) the delivery to any DTC Participant or any other person other than aBondholder, as shown in the registration books kept by the Trustee, of any notice with respect to theSeries 2003A Bonds, including any notice of redemption; or (iii) the payment to any DTCParticipant or any other person, other than a Bondholder, as shown in the registration books kept bythe Trustee, of any amount with respect to principal of, premium, if any, or interest on the Series2003A Bonds. The District, the Trustee and the Paying Agent may treat and consider the person inwhose name each Series 2003A Bond is registered in the registration books kept by the Trustee asthe holder and absolute owner of such Series 2003A Bond for the purpose of payment of principalof, premium, if any, and interest with respect to such Series 2003A Bond, for the purpose of givingnotices of redemption and other matters with respect to such Series 2003A Bond, for the purposeof registering transfers with respect to such Series 2003A Bond, and for all other purposeswhatsoever. The Paying Agent will pay all principal of and premium, if any, and interest on the

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Series 2003A Bonds only to or upon the order of the respective Bondholders, as shown in theregistration books kept by the Trustee, or their respective attorneys duly authorized in writing, asprovided in the Indenture, and all such payments will be valid and effective to fully satisfy anddischarge the District's obligations with respect to payment of principal of, premium, if any, andinterest on the Series 2003A Bonds to the extent of the sum or sums so paid. No person other thana Bondholder, as shown in the registration books kept by the Trustee, will receive a certificatedSeries 2003A Bond evidencing the obligation of the District to make payments of principal,premium, if any, and interest pursuant to the provisions of the Indenture.

Redemption Provisions of The Series 2003A Bonds

Mandatory Redemption of Series 2003A Bonds . The Series 2003A Bonds maturing onMay 1, 2034, are subject to mandatory sinking fund redemption on May 1 in the respective yearsset forth in the following table, at a Redemption Price of 100% of the principal amount thereof plusaccrued interest to the redemption date.

May 1 Amortization May 1 Amortizationof the Year Installment of the Year Installment

2005 $70,000 2020 $180,0002006 75,000 2021 190,0002007 80,000 2022 205,0002008 85,000 2023 215,0002009 90,000 2024 230,0002010 95,000 2025 245,0002011 100,000 2026 260,0002012 105,000 2027 280,0002013 115,000 2028 300,0002014 120,000 2029 320,0002015 130,000 2030 340,0002016 140,000 2031 360,0002017 150,000 2032 385,0002018 155,000 2033 410,0002019 165,000 2034 440,000 *

* Maturity

In connection with such mandatory sinking fund redemption of Series 2003A Bonds,amounts shall be transferred from the 2003A Revenue Account of the Revenue Fund to the 2003ASinking Fund Account of the Debt Service Fund, as provided in the Indenture.

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Adjustment of Sinking Fund Installments of a Series. The principal amounts specifiedin the foregoing table of Sinking Fund Installments will be adjusted as specified by the District byany principal amounts of the Series 2003A Bonds redeemed pursuant to, or purchased as permittedby, the Indenture.

Upon any redemption of Series 2003A Bonds other than in accordance with scheduledSinking Fund Installments, the District shall cause to be recalculated and delivered to the Trusteerevised Sinking Fund Installments recalculated so as to amortize the Outstanding principal amountof Series 2003A Bonds in substantially equal annual installments of principal and interest (subjectto rounding to Authorized Denominations of principal) over the remaining term of the Series 2003ABonds. The Sinking Fund Installments as so recalculated shall not result in an increase in theaggregate of the Sinking Fund Installments for Series 2003A Bonds in any year.

Optional Redemption of Series 2003A Bonds . The Series 2003A Bonds maturing afterMay 1, 2013, may, at the option of the District, be called for redemption as a whole, at any time, orin part on the first day of any month on or after May 1, 2013 (less than all of such Series 2003ABonds of such maturity to be selected by the District), at the redemption prices (expressed aspercentages of principal amount) set forth in the following table plus accrued interest from the mostrecent Interest Payment Date to the redemption date:

Redemption Periods Redemption(Dates Inclusive) Prices

May 1, 2013 through April 30, 2014 101%May 1, 2014 and thereafter 100

Extraordinary Mandatory Redemption of Series 2003A Bonds in Whole or in Part. TheBonds are subject to extraordinary mandatory redemption prior to maturity by the District in whole,on any date, or in part, on the first day of any month, at an extraordinary mandatory redemptionprice equal to 100% of the principal amount of the Bonds to be redeemed, plus interest accrued tothe redemption date, (i) from Series 2003A Prepayment Principal deposited into the Series 2003ABond Redemption Fund following the payment in whole or in part of Series 2003A SpecialAssessments on any portion of the District Lands benefited by the Series 2003A Project inaccordance with the provisions of the Indenture; (ii) from excess moneys in the 2003A ConstructionAccount of the Construction Fund transferred to the 2003A Bond Redemption Fund pursuant to theprovisions of the Indenture after completion of the 2003A Project, as evidenced by the certificateof the Consulting Engineer and District Manager required by the provisions of the Indenture; (iii)from moneys, if any, on deposit in the 2003A Bond Redemption Fund pursuant to the provisions ofthe Indenture following the damage or destruction of all or substantially all of the 2003A Project tosuch extent that, in the reasonable opinion of the District, the repair and restoration thereof wouldnot be economical or would be impracticable; provided, however, that at least forty-five (45) daysprior to such extraordinary mandatory redemption, the District shall cause to be delivered to theTrustee (x) notice setting forth the redemption date and (y) a certificate of the Consulting Engineerconfirming that the repair and restoration of the 2003A Project would not be economical or would

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be impracticable;(iv) following condemnation or the sale of any portion of the 2003A Project to agovernmental entity under threat of condemnation by such governmental entity and the payment ofmoneys by such governmental entity to the Trustee for deposit into the 2003A Bond RedemptionFund pursuant to the provisions of the Indenture in order to effectuate such redemption.

Monies for the Extraordinary Mandatory Redemption of Series 2003A Bonds shall bedeposited in the Prepayment Account of the 2003A Bond Redemption Fund, upon delivery to theTrustee of a certificate of the District Manager (i) setting forth the amounts and maturities of theSeries 2003A Bonds which are to be redeemed, (ii) containing cash flows demonstrating that, aftergiving effect to the Extraordinary Mandatory Redemption of Series 2003A Bonds in the amountsand maturities set forth in the Indenture as described in clause (i) above, and after giving effect tothe reamortization of Series 2003A Term Bonds in accordance with the provisions of the Indenture,the Series 2003A Pledged Revenues to be received by the District in the current and each succeedingBond Year will be sufficient to pay, when due, the principal, Maturity Amount and AmortizationInstallments of and interest on the remaining Outstanding Series 2003A Bonds.

On each March 15 and September 15 (or, if such date is not a Business Day, on the BusinessDay next preceding such day), the Trustee is required to determine the amount on deposit in the2003A Bond Redemption Fund, and, if the balance therein is greater than zero, transfer from the2003A Revenue Account for deposit in the 2003A Bond Redemption Fund an amount sufficient toincrease the amount on deposit therein to an integral multiple of $5,000 and thereupon give noticeand cause the extraordinary mandatory redemption of such Series 2003A Bonds on the nextsucceeding Interest Payment Date in the maximum aggregate principal amount for which moniesare then on deposit in such Bond Redemption Fund in accordance with the provisions forextraordinary redemption of such Series 2003A Bonds.

Not less than $100,000 aggregate principal amount of Series 2003A Bonds need be calledfor extraordinary mandatory redemption at one time

It is not anticipated that the Landowner will prepay the Series 2003A Special Assessments.

Notice of Redemption

Notice of each redemption of Series 2003A Bonds is required to be mailed by the Trustee,postage prepaid, not less than thirty (30) nor more than sixty (60) days prior to the Redemption Dateto the District and each registered Owner of Series 2003A Bonds to be redeemed at the address ofsuch registered Owner recorded on the bond register maintained by the Registrar on the fifth (5t h)day prior to such mailing. On the date designated for redemption, notice having been given andmoney for the payment of the Redemption Price being held by the Trustee, all as provided in theIndenture, the Series 2003A Bonds or such portions thereof so called for redemption will becomeand be due and payable at the Redemption Price provided for the redemption of such Series 2003ABonds or such portions thereof on such date, interest on such Series 2003A Bonds or such portionsthereof so called for redemption will cease to accrue, such Series 2003A Bonds or such portionsthereof so called for redemption will cease to be secured under the Indenture and the Owners thereofwill have no rights in respect of such Series 2003A Bonds or such portions thereof so called for

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redemption except to receive payments of the Redemption Price thereof so held by the Trustee.Further notice of redemption will be given by the Trustee to certain registered securities depositoriesand information services as set forth in the Indenture, but no defect in said further notice nor anyfailure to give all or any portion of such further notice will in any manner defeat the effectivenessof a call for redemption if notice thereof is given as described above.

Acceleration

The Indenture does not permit the acceleration of the principal of the Series 2003A Bondsupon the occurrence of an Event of Default thereunder.

Book-Entry Only System

The Series 2003A Bonds will be available in book-entry form only, in the principal amountof $5,000 or any integral multiple thereof. Purchasers of Series 2003A Bonds will not receivecertificates representing their interests in the Series 2003A Bonds purchased. The Underwriter willconfirm original issuance purchases with statements containing certain terms of the Series 2003ABonds purchased.

The Series 2003A Bonds will be held by DTC as securities depository. The ownership ofone fully registered Series 2003A Bond for each maturity as set forth on the cover page hereof, inthe aggregate principal amount of the issue, will be registered in the name of Cede & Co. as nomineefor DTC. DTC is a limited-purpose trust company organized under the laws of the State of NewYork, a member of the Federal Reserve System, a "clearing corporation" within the meaning of theNew York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisionsof Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created to holdsecurities of its participants ("DTC Participants") and to facilitate the clearance and settlement ofsecurities transactions among DTC Participants in such securities through electronic book-entrychanges in accounts of the DTC Participants, thereby eliminating the need for physical movementof securities certificates. DTC Participants include securities brokers and dealers, banks, trustcompanies, clearing corporations, and certain other organizations, certain of which own DTC eitherdirectly or through their representatives. Access to the DTC system is also available to other entitiessuch as banks, brokers, dealers and trust companies that clear through or maintain a custodialrelationship with a DTC Participant.

Purchases of the Series 2003A Bonds may be made by or through brokers and dealers whoare, or act through, DTC Participants. Such DTC Participants and the persons for whom theyacquire interests in the Series 2003A Bonds as nominees will not receive certificated bonds, but eachDTC Participant will receive a credit balance in the records of DTC in the amount of such DTCParticipant's interest in the Series 2003A Bonds, which will be confirmed in accordance with DTC'sstandard procedures. The ownership interest of the actual purchaser of each Series 2003A Bond (the"Beneficial Owner") will be recorded in the records of the DTC Participant. DTC Participants arerequired to provide Beneficial Owners with a written confirmation of their purchase containingdetails of the acquired Series 2003A Bonds. Transfers of ownership interests in the Series 2003A

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Bonds will be accomplished by book entry made by DTC and by the DTC Participants who act onbehalf of the Beneficial Owners.

The Trustee will make payments of principal of, premium, if any, and interest on the Series2003A Bonds to DTC or its nominee, Cede & Co., as registered owner of the Series 2003A Bonds.The current practice of DTC is to credit the accounts of the DTC Participants immediately uponreceipt of monies in accordance with their respective holdings as shown on the records of DTC.Payments by DTC Participants to Beneficial Owners will be in accordance with standinginstructions and customary practices such as those which are now in effect for municipal securitiesheld by DTC Participants in bearer form or registered in "street name" for the accounts of customers,and will be the responsibility of DTC Participants and not the responsibility of DTC, the Trustee orthe District, subject to any statutory or regulatory requirements as may be in effect from time totime.

The Trustee will send any notice of redemption or other notice only to DTC. Any failure ofDTC to advise any DTC Participant, or of any DTC Participant to notify the Beneficial Owner, ofany such notice and its content or effect will not affect the validity of the redemption of the Series2003A Bonds called for redemption or of any other action premised on such notice. Redemptionof portions of any maturity of the Series 2003A Bonds will reduce the outstanding principal amountof such maturity held by DTC. In such event, DTC may implement, through its book-entry system,a redemption of Series 2003A Bonds held for the account of DTC Participants in accordance withits own rules or other agreements with DTC Participants, and then DTC Participants may implementa redemption of Series 2003A Bonds for the Beneficial Owners.

NEITHER THE DISTRICT NOR THE TRUSTEE WILL HAVE ANYRESPONSIBILITYOR OBLIGATION TO DTC PARTICIPANTS, OR THE PERSONS FORWHOM DTC PARTICIPANTS ACT AS NOMINEES WITH RESPECT TO THE SERIES2003A BONDS, THE ACCURACY OF RECORDS OF DTC, CEDE & CO. OR ANY DTCPARTICIPANT OR THE PROVIDING OF NOTICE OR PAYMENT TO DTCPARTICIPANTS OR BENEFICIAL OWNERS, OR THE SELECTION OF SERIES 2003ABONDS FOR REDEMPTION.

The District and the Trustee cannot give any assurances that DTC, DTC Participants orothers will distribute payments of principal of, premium, if any, and interest on the Series 2003ABonds paid to DTC or its nominee, or any redemption or other notices to the Beneficial Owners, orthat they will do so on a timely basis or that DTC will serve or act in a manner described in thisLimited Offering Memorandum.

For every transfer and exchange of the Series 2003A Bonds, the Beneficial Owner may becharged a sum sufficient to cover any tax, fee or other government charge that may be imposed inrelation thereto.

DTC may determine to discontinue providing its services with respect to the Series 2003ABonds at any time by giving notice to the District and the Trustee and discharging its responsibilitieswith respect thereto under applicable law. In addition, the District may determine to discontinue the

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use of book-entry transfers through DTC (or any successor securities depository). Under suchcircumstances, certificated Series 2003A Bonds are required to be delivered as described in theIndenture.

In the event that the book-entry only system is discontinued, the following provisions willgovern the transfer and exchange of Series 2003A Bonds. Series 2003A Bonds will be exchangedfor an equal aggregate principal amount of corresponding Series 2003A Bonds in other authorizeddenominations and of the same maturity ("Replacement Bonds"), upon surrender thereof at theprincipal corporate trust office of the Trustee. The transfer of any Series 2003A Bond will beregistered on the books maintained by the Trustee for such purpose only upon the surrender thereofto the Trustee with a duly executed instrument of transfer or authorization for exchange in a formsatisfactory to the Trustee. For every exchange or transfer of registration of Series 2003A Bonds,the District and the Trustee may impose a charge sufficient to reimburse them for any tax or othergovernmental charge required to be paid with respect to such exchange or registration of transfer,but no other charge may be made to the Beneficial Owner for any exchange or registration oftransfer of the Series 2003A Bonds. The Trustee will not be required to transfer or exchange (i) anySeries 2003A Bond during a period beginning at the opening of business fifteen (15) days precedingan Interest Payment Date or fifteen days (15) preceding the mailing of a notice of redemption of theSeries 2003A Bonds selected for redemption and ending at the close of business on the InterestPayment Date or the day of such mailing, respectively, or (ii) any Series 2003A Bond selected forredemption in whole or in part.

Flow of Funds

The Indenture establishes with the Trustee a Revenue Fund and pursuant to the SeventhSupplemental Indenture a separate Account therein for the Series 2003A Bonds designated the“2003A Revenue Account,” into which the Trustee is required to immediately deposit any and allSeries 2003A Special Assessments received from the levy thereof on the District Lands or anyportion thereof (other than Prepayments) for the payment of the Series 2003A Bonds and other sumscoming due under, or pursuant to the Indenture relating to the Series 2003A Bonds (unless suchSeries 2003A Special Assessments and/or other payments are specifically designated by the Districtfor deposit into the Rebate Fund or any other Fund or Account established under the Indenture). The2003A Revenue Account in the Revenue Fund is required to be held by the Trustee separate andapart from all other Funds and Accounts held under the Indenture and from all other monies of theTrustee to secure the Series 2003A Bonds. On the Business Day preceding each Interest PaymentDate, commencing on the Business Day preceding May 1, 2003, the Trustee is required to transferfrom amounts on deposit in the 2003A Revenue Account in the Revenue Fund to the Funds andAccounts designated below, the following amounts in the following order of priority:

FIRST, to the 2003A Interest Account of the Debt Service Fund, an amount equalto the amount of interest payable on the Series 2003A Bonds then Outstanding on such May1, less any amount already on deposit in the 2003A Interest Account not previously credited;

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SECOND, to the 2003A Principal Account of the Debt Service Fund, an amount, ifany, equal to the principal amount of the Series 2003A Bonds maturing on such May 1, lessany amount already on deposit in the 2003A Principal Account not previously credited;

THIRD, beginning on the date set forth in the Seventh Supplemental Indenture, andeach May 1 thereafter, to the 2003A Sinking Fund Account of the Debt Service Fund, anamount, if any, equal to the principal amount of such Series 2003A Bonds subject tomandatory sinking fund redemption on such May 1, less any amount already on deposit inthe 2003A Sinking Fund Account not previously credited;

FOURTH, to the 2003A Interest Account of the Debt Service Fund, an amount equalto the amount of interest payable on the Series 2003A Bonds then Outstanding on the nextsucceeding Interest Payment Date, less any amount already on deposit in the 2003A InterestAccount not previously credited; and

FIFTH, to the Series 2003A Account of the Debt Service Reserve Fund, the amountnecessary in order to restore the balance in the 2003A Account in the Debt Service ReserveFund to the Series 2003A Debt Service Reserve Requirement; and

SIXTH, to such other Fund or Account as may be specified in the SeventhSupplemental Indenture, as described below.

The Seventh Supplemental Indenture establishes a 2003A Bond Redemption Fund for theSeries 2003A Bonds and therein a General Account, a Prepayment Account and an Insurance andCondemnation Proceeds Account. The Seventh Supplemental Indenture requires that the Trusteewithin ten (10) Business Days after the last Interest Payment Date in any calendar year, at thedirection of a Responsible Officer, withdraw any monies held for the credit of the Series 2003ARevenue Fund which are not otherwise required to be deposited pursuant to the Indenture anddeposit such monies as directed to the credit of the Series 2003A Bond Redemption Fund inaccordance with the provisions of the Seventh Supplemental Indenture.

Prepayments relating to the Series 2003A Bonds are required to be deposited upon receiptby the Trustee into the 2003A Prepayment Account. Excess monies in the 2003A ConstructionAccount of the Construction Fund are required to be deposited into the 2003A Prepayment Accountupon completion of the 2003A Project, as evidenced by a certificate of the Consulting Engineer andDistrict Manager. Monies on deposit on the Capitalized Interest Termination Date in the 2003AInterest Account of the Debt Service Fund representing capitalized interest on the Series 2003ABonds are required to be deposited into the 2003A Construction Account of the Construction Fund;provided, however, that prior to such transfer, the District Manager is required to certify to theTrustee that the Series 2003A Pledged Revenues will be sufficient to pay interest on the Series2003A Bonds on the next two (2) succeeding Interest Payment Dates. Insurance or condemnationproceeds received with respect to the 2003A Project, to the extent such proceeds are not to be usedto replace or restore such 2003A Project, are required to be deposited in the Series 2003A Insuranceand Condemnation Proceeds Account. Monies in the Series 2003A Revenue Fund on November

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1 of each calendar year after payment in full of interest and principal on the Series 2003A Bondsdue and payable in such calendar year are to be deposited in the Series 2003A General Account.

Monies in any Account in the 2003A Bond Redemption Fund (including all earnings oninvestments held therein) are required to be accumulated therein to be used in the following orderof priority, to the extent that the need therefor arises:

From the General Account:

FIRST, to make such deposits into the Rebate Fund as the District may direct inaccordance with the Arbitrage Rebate Certificate, such monies thereupon to be used solelyfor the purposes specified in the Arbitrage Rebate Certificate. Any monies so transferredfrom the 2003A Bond Redemption Fund to the Rebate Fund will thereupon be free from thelien and pledge of the Indenture; and

SECOND, the remainder to be utilized by the Trustee, to be used for any lawfulpurpose, including, without limitation, to call for redemption on the first day of each monthon which Series 2003A Bonds are subject to optional redemption, such amount of Series2003A Bonds as, with the redemption premium, may be practicable; and

From an Insurance and Condemnation Proceeds Account:

FIRST, to be deposited in the 2003A Construction Account of the Construction Fundin the amount necessary to make up for any deficiency in the amount of insurance proceedsor condemnation awards received, in the event that after any damage or destruction or takingof the 2003A Project or a portion thereof and a decision by the District to repair, rebuild,replace or restore such 2003A Project, the amount of insurance proceeds or condemnationawards received, together with the amounts already on deposit in the 2003A ConstructionAccount of the Construction Fund is insufficient to pay for such repair, rebuilding,replacement or restoration of the damaged, destroyed or taken portion of the 2003A Project;and

SECOND, to be utilized by the Trustee to call for extraordinary mandatoryredemption Series 2003A Bonds as specified in the Indenture in an amount equal to theamount of money transferred to the Series 2003A Insurance and Condemnation ProceedsAccount of the 2003A Bond Redemption Fund pursuant to such redemption provisions; and

From the Prepayment Account, to be utilized by the Trustee to call for extraordinarymandatory redemption of Series 2003A Bonds in an amount equal to the amount of money depositedin the Prepayment Account of the 2003A Bond Redemption Fund.

Any such redemption shall be made in accordance with the provisions of the MasterIndenture and the District will pay all expenses in connection with such redemption.

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Security for and Source of Payment of the Series 2003A Bonds

General

The Series 2003A Bonds are secured equally and ratably by a first lien upon and pledge ofthe Series 2003A Pledged Revenues, which are defined in the Indenture to mean with respect to theSeries 2003A Bonds (a) all revenues received by the District from Series 2003A SpecialAssessments levied and collected on the District Lands benefited by the 2003A Project, including,without limitation, amounts received from any foreclosure proceeding for the enforcement ofcollection of such Series 2003A Special Assessments or from the issuance and sale of tax certificateswith respect to such Series 2003A Special Assessments, and (b) all moneys on deposit in the Fundsand Accounts established under the Indenture; provided, however, that Pledged Revenues shall notinclude (A) any moneys transferred to the Rebate Fund, or investment earnings thereon and (B)"special assessments" levied and collected by the District under Section 190.022 of the Act formaintenance purposes or "maintenance special assessments" levied and collected by the Districtunder Section 190.021(3) of the Act (it being expressly understood that the lien and pledge of theIndenture shall not apply to any of the moneys described in the foregoing clauses (A) and (B) of thisproviso).

The Series 2003A Bonds are additionally secured by amounts on deposit in the Funds andAccounts, other than the Rebate Fund, created pursuant to the Indenture for the 2003A Bonds andamounts on deposit in the Debt Service Reserve Fund relating to the Series 2003A Bonds (See "Security for and Source of Payment of the Series 2003A Bonds - Reserve Account in the DebtService Reserve Fund").

THE SERIES 2003A BONDS AUTHORIZED UNDER THE INDENTURE AND THEOBLIGATION EVIDENCED THEREBY SHALL NOT CONSTITUTE A LIEN UPON ANYPROPERTY OF THE DISTRICT, INCLUDING, WITHOUT LIMITATION, THE SERIES 2003APROJECT OR ANYPORTION THEREOF IN RESPECT OF WHICH ANY SUCH BONDS AREBEING ISSUED, OR ANY PART THEREOF, BUT SHALL CONSTITUTE A LIEN ONLY ONTHE SERIES 2003A PLEDGED REVENUES AS SET FORTH IN THE INDENTURE.NOTHING IN THE SERIES 2003A BONDS AUTHORIZED UNDER THE INDENTURE OR INTHE INDENTURE SHALL BE CONSTRUED AS OBLIGATING THE DISTRICT TO PAY THESERIES 2003A BONDS OR THE REDEMPTION PRICE THEREOF OR THE INTERESTTHEREON EXCEPT FROM THE SERIES 2003A PLEDGED REVENUES, OR AS PLEDGINGTHE FAITH AND CREDIT OF THE DISTRICT, THE CITY, THE COUNTY OR THE STATEOR ANY POLITICAL SUBDIVISION THEREOF, OR AS OBLIGATING THE DISTRICT, THECITY, THE COUNTY OR THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS,DIRECTLY OR INDIRECTLY OR CONTINGENTLY, TO LEVY OR TO PLEDGE ANY FORMOF TAXATION WHATEVER THEREFOR.

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No Additional Bonds; Parity Liens of Other Assessments and Taxes

Pursuant to the Indenture, the District has covenanted that the Pledged Revenues pledged tothe Series 2003A Bonds are not and will not be subjected to any other lien senior to or on a paritywith the lien created in favor of the Series 2003A Bonds and any Additional Bonds (to the extentpermitted in the Indenture), any Credit Facility Issuer and any Liquidity Facility Issuer permittedunder the Master Indenture. ALTHOUGH THE LIEN AND THE PROCEEDS OF THEASSESSMENTS PLEDGED TO THE SERIES 2003A BONDS ARE PLEDGED EXCLUSIVELYTO THE SERIES 2003ABONDS, THE LIEN OF THE SERIES 2003A ASSESSMENTS MAY BEON THE SAME PROPERTY AS, AND THEREFORE OVERLAP AND BE CO-EQUAL WITH,THE LIEN OF FUTURE ASSESSMENTS RELATED AND PLEDGED TO OTHER SERIES OFBONDS HEREAFTER ISSUED BY THE DISTRICT TO FINANCE THE BALANCE OF THECOSTS OF THE ASSESSABLE CAPITAL IMPROVEMENTS COMPRISING THEDEVELOPMENT OF PHASE V/SOUTH VILLAGE 2 NOTFINANCED WITH THE PROCEEDSOF THE SERIES 2003A BONDS (HEREINAFTER DESCRIBED) AND THE LIENS OF OTHERASSESSMENTS WHICHMAY BE IMPOSED BY OSCEOLA COUNTY, FLORIDA OR OTHERUNITS OF LOCAL GOVERNMENT HAVING ASSESSMENT POWERS WITHIN THEDISTRICT AND WILL ALSO BE CO-EQUAL WITH THE LIEN OF SUCH DISTRICT,COUNTY, SCHOOL DISTRICT AND MUNICIPAL AD VALOREM TAXES AND NON ADVALOREM ASSESSMENTS (see "Overlapping Assessments" and "Enforcement and Collectionof Assessments").

Overlapping Assessments

The Series 2003A Bonds will fund only a portion of the cost of the public infrastructureneeded for the complete development of Phase V/South Village 2. The Developer will enter into afunding agreement with the District, pursuant to which the Developer will advance funds to theDistrict with which to construct the balance of such public infrastructure, with such advances to berepaid from the proceeds of future Series of Bonds, if, as and when issued. It is anticipated that theDistrict may in the future issue future Series of Bonds to fund all or a portion of such advancesand/or the costs of such public infrastructure. Such future Series of Bonds would be payable fromand secured by Special Assessments which, pursuant to the Assessment Methodology, will be leviedon lands securing the Series 2003A Bonds and such Special Assessments will therefore overlap andbe co-equal with, the lien of the Series 2003A Assessments and other assessments which may beimposed by the District, Osceola County, Florida or other units of local government havingassessment powers within the District, and will also be co-equal with the lien of County, schooldistrict and municipal ad valorem taxes.

Enforcement and Collection of Assessments

The primary source of payment for the Series 2003A Bonds is the Series 2003A SpecialAssessments. To the extent that landowners fail to pay such Assessments, delay payments, or areunable to pay Assessments, the successful pursuit of collection procedures available to the Districtis essential to continued payment of principal of and interest on the Series 2003A Bonds. The Act

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provides for various methods of collection of delinquent taxes by reference to other provisions ofthe Florida Statutes. The following is a summary of assessment payment and collection proceduresappearing in the Florida Statutes, but is qualified in its entirety by reference to such statutes.

The District has covenanted in the Indenture to assess, levy, collect or cause to be collectedand enforce the payment of Assessments pledged to the Series 2003A Bonds in the mannerprescribed by the Indenture and all resolutions, ordinances or laws thereunto appertaining and payor cause to be paid to the Trustee the proceeds of Assessments, as received. Florida law providesthat, subject to certain conditions, non-ad valorem special assessments may be collected in the samemanner as county ad valorem taxes or directly by the District.

Series 2003A Special Assessments to be Collected Directly by the District Prior toPlatting. It is contemplated that the District will collect the Series 2003A Special Assessmentsdirectly prior to the platting into lot-sized parcels. Such method of collection permits foreclosurein the same manner as real estate mortgages. Section 170.10, Florida Statutes, provides that uponthe failure of any property owner to pay the principal of Series 2003A Special Assessments or theinterest thereon, when due, the governing body of the District is authorized to commence legalproceedings for the enforcement of the payment thereof, including commencement of an action inchancery, commencement of a foreclosure proceeding in the same manner as the foreclosure of areal estate mortgage, or commencement of an action under Chapter 173, Florida Statutes, relatingto foreclosure of municipal tax and special assessment liens. It is likely that any action to enforcepayment of the Series 2003A Special Assessments will proceed under the provisions of Chapter 173,Florida Statutes, which provides that after the expiration of one year from the date any specialassessment or installment thereof becomes due, the District may commence a foreclosure proceedingagainst the lands upon which the assessments are liens. Such a proceeding is in rem, meaning thatit is brought against the land and not against the owner. After at least thirty (30) days' written noticeto any record owner and at least four (4) weeks' prior published notice, a judicial hearing will beconducted in which any interested party may appear and contest the foreclosure; however, anyperson contesting the assessment or the lien must deposit with the court the amount which such partyclaims is the amount of any such assessment which is due. Upon a judgment for delinquentassessments, a special master will be appointed to sell the property at public auction, at which salethe District may also bid. Proceeds of any such foreclosure sale are required by the statute to beshared for the payment of state, city, county or other taxes or assessments in the manner determinedby the special master. THERE CAN BE NO ASSURANCE THAT ANY SALE,PARTICULARLY A BULK SALE, OF LAND SUBJECT TO DELINQUENTASSESSMENTS WILL PRODUCE PROCEEDS SUFFICIENT TO PAY THE FULLAMOUNT OF SUCH DELINQUENT ASSESSMENTS PLUS OTHER DELINQUENTTAXES AND ASSESSMENTS APPLICABLE THERETO. ANY SUCH DEFICIENCYCOULD RESULT IN THE NECESSITY OF THE DISTRICT TO RELY UPON AMOUNTSIN THE RESERVE ACCOUNT IN THE DEBT SERVICE RESERVE FUND TO PAY DEBTSERVICE ON THE SERIES 2003A BONDS WHEN DUE.

Series 2003A Special Assessments, After Platting, to be Collected in Same Manner asCounty and School District Taxes. Florida law provides that subject to certain conditions,assessments may be collected in the same manner as county and school district ad valorem taxes.

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Subsequent to platting, the Series 2003A Special Assessments are expected to be collected utilizingthe tax roll collection method. Assessments pledged to the Series 2003A Bonds will be payable inannual installments and will be levied by the District each year until the final stated maturity of theSeries 2003A Bonds. The District will certify to the Osceola County Property Appraiser the amountof the Assessments which include principal and interest payable on the Series 2003A Bonds in thesubsequent year. The District has an agreement with the Property Appraiser that the PropertyAppraiser will place such Assessments on the tax roll and forward the roll to the Osceola CountyTax Collector's office which is empowered to collect such Assessments.

The statutes relating to enforcement of county taxes provide that county taxes becomepayable on November 1 of the year when assessed, constitute a lien upon the land from January 1of the year following their levy, are due March 1 of such following year and are delinquent on April1 of such following year. The tax collector of Osceola County (the "County Tax Collector") is tobill such taxes together with all other County taxes, and landowners in the District are required topay all such taxes without preference in payment of any particular increment of the tax bill, such asthe increment owing for the Assessments. Upon receipt of monies from the County Tax Collector,either the Trustee or the District, as applicable, will cause such monies to be deposited to thecorresponding Revenue Account in the Revenue Fund established under the Indenture for the Series2003A Bonds.

All county, school and special district taxes, assessments and voter-approved ad valoremtaxes, including Assessments levied by the District, are payable at one time. If a taxpayer does notmake complete payment, he or she cannot designate specific line items on his or her tax bill asdeemed paid in full. In such cases, the Tax Collector does not accept such partial payments and thepartial payment is returned to the taxpayer. Therefore, any failure to pay any one line item, whetherit be the Assessments or not, would cause the Assessments to not be collected to that extent whichwould have a significant adverse effect on the ability of the District to make full or punctualpayment of Debt Service on the Series 2003A Bonds.

If Assessments are paid during the November of the year when assessed or during thefollowing three months, the taxpayer is granted a variable discount equal to 4% in November anddecreasing 1% per month to 1% in February. All unpaid taxes become delinquent on April 1 of theyear following assessment, and the County Tax Collector is required to collect taxes prior to April 1and after that date to institute statutory procedures upon delinquency to collect assessed taxes.Delay in the mailing of tax notices to taxpayers will result in a delay throughout this process.

Taxpayers may elect to pay assessments in quarterly payments on June 30, September 30,December 31 of the year levied and March 31 of the year following. The first three paymentsreceive discounts of 6%, 4% and 3% respectively.

Certain qualified taxpayers may defer the assessments on homestead property. The amountof ad valorem taxes and non-ad valorem assessments which may deferred is limited to an amountby which such amounts exceed 5% of the taxpayer's household income for the prior calendar yearprovided that applicants with household income of less than $10,000 may defer the taxes and

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assessments in their entirety. Any such deferred taxes and assessments bear interest at a variablerate not to exceed 9.5%.

Collection of delinquent taxes is, in essence, based upon the sale by the County TaxCollector of "tax certificates" and remittance of the proceeds of such sale to the District for paymentof the Assessments due. In the event of a delinquency in the payment of taxes, the landowner mayprior to the sale of the tax certificates, pay delinquent taxes plus an interest charge of 18% perannum on the amount and on other costs and charges, except that there shall be a minimum interestcharge of 3% on the amount of delinquent taxes. If the landowner does not act, the County TaxCollector is to sell tax certificates to the person who pays the taxes owing and interest thereon andcertain costs, and who accepts the lowest interest rate to be borne by the certificates (but not morethan 18%). If there are no bidders, the County is to hold, but not pay for, tax certificates withrespect to the property, bearing interest at the maximum legal rate of interest. The County may sellsuch certificates to the public at any time at the principal amount thereof plus interest at the rate ofnot more than 18% per annum and a fee. The demand for such certificates is dependent uponvarious factors which include the rate of interest which can be earned by ownership of suchcertificates and the value of the land which is the subject of such certificates and which may besubject to sale at the demand of the certificate holder. The underlying market value of the propertyin the District should determine the demand for such property and the expectation of successfulcollection of the Assessments thereon which are the primary source of payments on the Series2003A Bonds.

Any tax certificate in the hands of a person other than the County may be redeemed andcancelled by the person owning or claiming an interest in the underlying land, or a creditor thereof,so long as such redemption occurs prior to the time a tax deed is issued. The person effecting suchredemption must pay the face amount of the certificate and interest at the rate borne by thecertificate plus costs and other charges. Regardless of the interest rate actually borne by thecertificates, persons redeeming tax sales certificates must pay a premium interest rate of 5%, unlessthe rate borne by the certificates is zero percent. The proceeds of such redemption are paid to theCounty Tax Collector who transmits to the holder of the tax certificate such proceeds less servicecharges, and the certificate is cancelled. Redemption of tax certificates held by the County iseffected by purchase of such certificates from the County, as described in the preceding paragraph.

The private holder of a tax certificate which has not been redeemed has seven years from thedate of issuance in which to act against the property. After an initial period of two years has passed,during which time action against the land is held in abeyance to allow for sales and redemptions oftax certificates, such holders may apply for a tax deed. The applicant is required to pay to theCounty Tax Collector all amounts required to redeem outstanding tax certificates covering the landnot held by him, and any omitted taxes or delinquent taxes, plus interest. If the County holds a taxcertificate and has not succeeded in selling it, the County must apply for a tax deed after theCounty's ownership of such certificate for two years. The County pays costs and fees to the CountyTax Collector but not any amount to redeem other outstanding certificates covering the land.Thereafter, the property is advertised for public sale.

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In any such public sale, the private holder of the tax certificate who is seeking a tax deed fornon-homestead property is deemed to submit a minimum bid equal to the amount required to redeemthe tax certificate, and charges for cost of sale, redemption of other tax certificates on the land, andthe amounts paid by such holder in applying for the tax deed, plus interest thereon. In the case ofhomestead property, the minimum bid must include, in addition to the amount of money requiredfor the opening bid on non-homestead property, an amount equal to one-half of the latest assessedvalue of the homestead. If there are no other bidders, the holder receives title to the land, and theamounts paid for the certificate and in applying for a tax deed are credited toward the purchase price.If there are other bidders, the holder may enter the bidding. The highest bidder is awarded title tothe land. If there are no bidders, the County may purchase the land within ninety (90) days of theoffering for public sale for the minimum bid. After ninety (90) days have passed, any person maypurchase the land by paying the minimum bid to the County. Taxes accruing after the date of publicsale do not require the repetition of this process but are added to the minimum bid. Seven (7) yearsafter the date of public sale, unsold lands escheat to the County in which they are located and all taxcertificates and liens against the property shall be canceled and a deed is executed vesting title inthe County Commissioners. The portion of proceeds of such sale needed to redeem the taxcertificate (and all other amounts paid by such person in applying for a tax deed) are forwarded tothe holder thereof or are credited to such holder if he is the successful bidder. Excess proceeds aredistributed first to satisfy governmental liens against the property and then to the former title holderof the property (less service charges).

Prepayment of Assessments

Pursuant to the terms of the Act and the assessment proceedings relating to the Series 2003ABonds, the owner of property subject to Assessments may pay the entire balance of such Assessmentremaining due within thirty (30) days after the corresponding Project has been completed and theBoard of Supervisors has adopted a resolution accepting such Project as provided by FloridaStatutes, Section 170.09, without interest, and, may prepay the Assessments in whole at any time,and in part one time, if there is also paid, in addition to the prepayment amount, an amount equalto the interest that would otherwise be due on such balance on the next succeeding Interest PaymentDate for the Series 2003A Bonds, or, if prepaid during the forty-five day period preceding suchInterest Payment Date, to the next succeeding Interest Payment Date. The Landowner, in a covenantrunning with the land, has waived the benefit of the statutory option to prepay under Section 170.09without interest as described above on behalf of itself and future owners of the land.

The Series 2003A Bonds are subject to extraordinary mandatory redemption as indicatedunder "Description of the Series 2003A Bonds - Redemption Provisions - Extraordinary MandatoryRedemption of Series 2003A Bonds," from such Prepayments at the redemption price of par plusaccrued interest to the date of such redemption. The prepayment of installments of Assessmentsdoes not entitle the owner of the property to a discount for early payment.

Adjustments to Assessments

Upon completion of the 2003A Project, the Series 2003A Special Assessments will becredited with any excess of the original Series 2003A Special Assessments over the actual cost

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(including, without limitation, costs associated with the issuance of the Series 2003A Bonds (andany Parity Bonds), the capitalized interest and the Reserve Account within the Debt Service ReserveFund) funded from proceeds of the Series 2003A Bonds.

Assessment Methodology

A Supplemental Special Assessment Allocation Report relating to the Series 2003A Bondsprepared by Rizzetta & Company, Incorporated, the Financial Consultant to the District appearsherein in Appendix E. The comprehensive assessment methodology is supplemented for theAssessments relating to each Series of Bonds using construction cost estimates and land use areasprovided by the Consulting Engineer and a bond par amount and debt service schedule provided bythe Underwriter. The Financial Consultant makes no representation or warranty as to the accuracyof the information provided by other parties for inclusion in the Assessment Methodology. TheDistrict has heretofore adopted the general allocation methodology described below, and, hasapportioned the benefits of the Series 2003A Project upon the issuance of the Series 2003A Bondstherefor in accordance with the general apportionment methodology described below.

Structure of Assessments. Assessments will be payable over no more than 30 annualinstallments. According to the District's Assessment Proceedings, the owner of the property subjectto the Assessments may pay the entire balance either: (i) in full at any time or (ii) partially, one time(upon reclassification of a parcel as described below).

Apportionment Methodology. The Assessments are first apportioned to each Village on thebasis of intended costs and benefits. Initially, all of the land within the District was classified as"Undesignated." Classification of the land is changed to one of the other, permanent, classifications,upon written request to the District by the landowner. Reclassification results in the imposition ofthe "Density Reduction Payment," if applicable (described below), and terminates the right of thelandowner to prepay the Assessment in part.

The allocation of the Assessments to property classified as "Undesignated" is determined bydividing (x) the aggregate amount of the Assessments of such Series apportioned to each Villagewhich have not been allocated to property previously classified by (y) the number of acres of landin such Village which have not been reclassified (i.e. the "Undesignated Land"). The result of suchallocation is to spread evenly the unallocated Assessments of each Series in each Village over allof the Undesignated Acres in each Village. The benefit theory underlying such method of allocationis that the assessable improvements yield development rights which constitute a special benefit tothe property to which they appertain. As development rights are allocated first to all of the land inthe area to which the development order applies and then expended as such rights are used, so arethe Assessments of each Series allocated first to all of the developable land and then allocated inrelation to the expenditure of the development rights.

Upon reclassification of a parcel in a Village to the end-use, the per acre Assessment of eachSeries in such Village attributable to "Undesignated" property is redetermined. The basis for thereallocation is to apportion the costs allocable to roads, if any, based upon average daily tripgeneration rates and to apportion non-road related costs based upon equivalent residential units. In

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order to prevent any Assessment of a Series relating to Undesignated Land from increasing (whichwould reflect that the average density of development per acre was less than originally anticipated),the Assessment Methodology requires that there be paid a "Density Reduction Payment" to recoverthe cost of benefits of infrastructure constructed for a higher level of use but which cost could nototherwise be recovered due to the lowered development density. The Density Reduction Paymentis described in the Assessment Methodology under the caption "MODIFICATIONS ANDREVISIONS."

The allocations of permanent Assessments are set forth in the Assessment Methodology byproduct type.

Annual installments of Assessments will be grossed-up by dividing the annual installmentfor principal and interest by up to .94 (1-Maximum Discount-Maximum Costs of Collection) inorder to insure that sufficient monies are netted to the District after allowable discount andadministrative expenses to pay Debt Service on the Series 2003A Bonds. In addition, the Districtwill impose, levy and collect an annual operation and maintenance assessment to fund ongoingoperations of the District.

The owners of land within the District have an option to prepay Assessments at any time;however, it is not anticipated that the Landowner will prepay the Series 2003A Special Assessments.No assurance can be given that any particular level of prepayment will or will not occur in the futureor as to the timing of such Prepayments by future landowners.

Reserve Account in the Debt Service Reserve Fund

The Indenture establishes a separate account in the Debt Service Reserve Fund for the Series2003A Bonds. The Reserve Account for the Series 2003A Bonds will be cash funded from theproceeds of the Series 2003A Bonds at closing in an amount equal to the Debt Service Reserve FundRequirement applicable to the Series 2003A Bonds. Amounts on deposit in the Reserve Accountfor the Series 2003A Bonds may be used only for the purpose of paying interest or principal on theSeries 2003A Bonds whenever amounts on deposit in the accounts established for the Series 2003ABonds in the Debt Service Fund is insufficient for such purpose. (See "Security for and Source ofPayment of the Series 2003A Bonds - “Reserve Account in the Debt Service Reserve Fund.”)

The 2003A Project

General

The Series 2003A Bonds will provide a portion of the necessary funding for publicinfrastructure for South Village 2. Utility improvements for South Village 2 will be funded byUtility Revenue Bonds, Series 1999, issued by the Enterprise District. According to the Engineer's

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Report, South Village 2 may be completed, with all the necessary public infrastructure to supportthe development program, without reliance on subsequent phases.

The South Village 2 improvements will be divided into several components: roadway,potable water, wastewater collection and transmission, reuse water, parcel earthwork for thecollection and control of stormwater runoff, stormwater management, streetlight and alley lighting,sidewalks and trails and landscaping/hardscaping of public area improvements for South Village 2.The South Village 2 financing program will be comprised of the Series 2003A Bonds and otherfunding as follows:

Non-Utility Infrastructure $11,137,089 *Utility Infrastructure 1,913,385 **Additional Infrastructure 248,600 ***Total $13,299,074

* These amounts will be funded from both the Series 2003A Bonds as well asdeveloper advances/future assessment bond series.

** The $1,913,385 is a portion of Enterprise District Utility Bonds, Series 1999in an aggregate amount of $13,338,483.

*** Developer Contribution.

The improvement costs for South Village 2 to be funded, in part, from the proceeds of theSeries 2003A Bonds, are set forth below:

Roads and Bridges $ 2,672,325Earthwork 2,176,715Stormwater Management Systems 1,118,879Common Area Development/Parks/Trails 2,686,257Streetlights 457,992Subtotal 9,112,168Professional Services/Contingency 2,024,921Total $11,137,089

The estimated construction costs for the South Village 2 improvements were prepared by theDistrict Engineer based upon master plans and preliminary engineering designs and utilizedcomparable unit prices from previous Phases' actual bidding results and from comparableinformation on similar projects within Central Florida. The necessary permits for Phase 1, Phase2 and Phase 3 have been acquired. The necessary permits for Phase 4 have been acquired, with theexception of portions of East Village and Aquila Reserve (formerly designated East Village 2),which are still being prepared or in process. Identification of the various Phase V/South Village 2permits and their status has been included in the Engineer's Report. Design and permitting theprimary roadways of Phase 4 improvements have been completed. Design and permitting of East

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Village has been completed. Design and permitting of Roseville Corner is complete. Design andpermitting of Aquila Reserve is currently underway.

Construction of the South Village 2 infrastructure began in the Fall of 2002 and will continuethrough September 2006.

The District does not own or operate a water and wastewater treatment plant. Instead,potable water and sanitary sewer service is provided to Celebration by the Enterprise District underand pursuant to the terms of an interlocal agreement. Water, wastewater and reuse water is suppliedto the Enterprise District by the City of Kissimmee, Florida (the "City"), under and pursuant to theterms of a Large User Service Agreement, between the Enterprise District, as assignee of TheCelebration Company, and the City. Funds for the Phase 4 and 5 utility services will be providedfrom the proceeds of the Enterprise District's Utility Revenue Bonds, Series 1999.

Permits and Approvals

According to the Engineer's Report all permits for Celebration Place Widening, CelebrationBoulevard Widening, Celebration Boulevard Extension and Roseville Corner have been received.East Village and Aquila Reserve permits have been submitted and are under review by therespective regulatory agencies. As set forth in the Engineer's Report, there are no anticipated delaysin permitting the District infrastructure improvements. A summary of the District wide and Phase5 permits are summarized in Table 4-6 of the Engineer's Report included herein as Appendix A.

Repayment of Certain Obligations to the Developer

In connection with the acquisition and construction of the 2003A Project, the Developer hasadvanced funds to the District to pay for components of the 2003A Project. Such advances will berepaid from the proceeds of the Series 2003A Bonds in the approximate amount of $700,000.

The Series 2003A Bonds will fund only a portion of the cost of the 2003A Project. Theremaining costs will be funded by moneys advanced by the Developer pursuant to a fundingagreement which provides that the Developer advances will be repaid from proceeds of future Seriesof Bonds, when, as and if issued. No assurance can be given that the District will issue such futureSeries of Bonds. Completion of the portion of the 2003A Project is dependent upon the Developersatisfying its obligations under the funding agreement.

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Estimated Sources and Uses of Funds

Sources (1)

Series 2003A Bond Proceeds $6,035,000.00

Total Sources $6,035,000.00

Uses(1)

Deposit to Series 2003A Construction Fund $4,706,718.78Capitalized Interest(2) 624,391.22Costs of Issuance and Underwriter's Discount 294,490.00Deposit to Reserve Account 454,400.00

Total Uses $6,035,000.00

______________________________(1) Does not include accrued interest from February 15, 2003.(2) Represents interest on the Series 2003A Bonds through November 1, 2004.

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Principal and Interest Requirements Series 2003A Bonds

May 1of the Year Principal Interest Total

2003 $81,539.56 $81,539.562004 386,240.00 386,240.002005 $70,000.00 386,240.00 456,240.002006 75,000.00 381,760.00 456,760.002007 80,000.00 376,960.00 456,960.002008 85,000.00 371,840.00 456,840.002009 90,000.00 366,400.00 456,400.002010 95,000.00 360,640.00 455,640.002011 100,000.00 354,560.00 454,560.002012 105,000.00 348,160.00 453,160.002013 115,000.00 341,440.00 456,440.002014 120,000.00 334,080.00 454,080.002015 130,000.00 326,400.00 456,400.002016 140,000.00 318,080.00 458,080.002017 150,000.00 309,120.00 459,120.002018 155,000.00 299,520.00 454,520.002019 165,000.00 289,600.00 454,600.002020 180,000.00 279,040.00 459,040.002021 190,000.00 267,520.00 457,520.002022 205,000.00 255,360.00 460,360.002023 215,000.00 242,240.00 457,240.002024 230,000.00 228,480.00 458,480.002025 245,000.00 213,760.00 458,760.002026 260,000.00 198,080.00 458,080.002027 280,000.00 181,440.00 461,440.002028 300,000.00 163,520.00 463,520.002029 320,000.00 144,320.00 464,320.002030 340,000.00 123,840.00 463,840.002031 360,000.00 102,080.00 462,080.002032 385,000.00 79,040.00 464,040.002033 410,000.00 54,400.00 464,400.002034 440,000.00 28,160.00 468,160.00

$6,035,000.00 $8,193,859.56 $14,228,859.56

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The District

General Information

The District was established by Rule 42Q promulgated by the Florida Land and WaterAdjudicatory Commission on March 8, 1994 and effective on March 29, 1994.

Powers

Among other provisions, the Act gives the District's Board of Supervisors the authority to(a) plan, establish, acquire, construct or reconstruct, enlarge or extend, equip, operate and maintain:(i) water management and control for lands within the District and to connect any of such facilitieswith roads and bridges, (ii) water supply, sewer and wastewater management systems or anycombination thereof and to construct and operate connecting intercept or outlet sewers and sewermains 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 byproductsof such system or sewer system, (iii) bridges or culverts, (iv) roads equal to or exceeding thespecifications of the county in which such district roads are located, and street lights, (v) any otherproject within or without the boundaries of a district when a local government issued a developmentorder approving or expressly requiring the construction or funding of the project by the District, orwhen the project is the subject of an interlocal agreement between the District and a governmentalentity and is consistent with the local government comprehensive plan of the local governmentwithin which the project is to be located; (b) borrow money and issue bonds of the District; (c)impose and foreclose special assessment liens as provided in the Act; and (d) exercise all otherpowers necessary, convenient, incidental or proper in connection with any of the powers or dutiesof the District stated in the Act. In addition, pursuant to the Act, the District has been authorizedby Resolution of Osceola County, Florida, the local general-purpose government within thejurisdiction of which such powers are to be exercised, to exercise additional powers under the Act,including planning, establishing, acquiring, constructing or reconstructing, enlarging and extending,equipping, operating, and maintaining additional systems and facilities for parks and facilities forsecurity, solid waste disposal, indoor and outdoor recreational, cultural, and educational uses.

The Act does not empower the District to adopt and enforce land use plans or zoningordinances and the Act does not empower the District to grant building permits, which functions areperformed by the County acting through its Board of County Commissioners and its departmentsof government.

Board of Supervisors

The governing body of the District is its Board of Supervisors (the "Board"), which iscomposed of five Supervisors (the "Supervisors"). The Act provides that at the initial meeting ofthe landowners Supervisors must be elected with the two Supervisors receiving the highest numberof votes to serve for four years and the remaining Supervisors for a two-year term. Three of the fiveSupervisors are elected to the Board every two years in November. At such election the twoSupervisors receiving the highest number of votes are elected to four-year terms and the remaining

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Supervisor is elected to a two-year term. Four Supervisors normally serve a four-year term whilethe fifth Supervisor normally serves a two-year term. Commencing with the election of Supervisorsin 2004, the Supervisors will begin to be elected by the electors of the District in the mannerprescribed by Florida law for holding general elections. If there is a vacancy on the Board, theremaining board members are to fill each vacancy for the unexpired term.

The current members of the Board, the occupation and the term of each member are set forthbelow:

Current Term TermName Title Commenced Expires

HalMcIntyre* Chairman November, 2000 November, 2004Linda Goodwin-Nichols Vice Chair November, 2000 November, 2004Steven D. Katz** Secretary November, 2002 November, 2006David Muenks* Member*** November, 2002 November, 2006Eva Tukdarian* Member*** November, 2002 November, 2004________________________________

* Employee of The Walt Disney Company or its subsidiaries.** Resident member.*** Also an Assistant Secretary.

The Act authorizes the Board to hire such employees and agents as it may determinenecessary. Hopping Green & Sams, Professional Association., Tallahassee, Florida, serves ascounsel to the District. The District has retained Greenberg Traurig, P.A., Miami, Florida, as BondCounsel. The District has retained Severn Trent Services, Inc. as District Manager. Rizzetta &Company, Incorporated has been retained as financial consultant to the District.

Pursuant to the Act, the District has retained PBSJ, Orlando, Florida, as District Engineer.

The District Manager

The chief administrative official of the District is the District Manager. The Act providesthat the District Manager has charge and supervision of the works of the District and is responsiblefor preserving and maintaining any improvement or facility constructed or erected pursuant to theprovisions of the Act, for maintaining and operating the equipment owned by the District, and forperforming such other duties as may be prescribed by the Board. The District has retained SevernTrent Services, Inc., Celebration, Florida (the "District Manager") to serve as District Manager. TheDistrict Manager is actively involved in the management of more than 100 special districtsthroughout the State of Florida, including community development districts, that have collectivelyissued in excess of $1,000,000,000 of bonds in more than 70 separate financings. The DistrictManager's office is located at 610 Sycamore Street, Suite 140, Celebration, Florida 34747 and itstelephone number is (407) 566-1935.

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Outstanding Bonds

The District has previously issued its $63,455,000 Celebration Community DevelopmentDistrict Special Assessment Bonds, Series 1994 (the "1994 Bonds") under and pursuant to the FirstSupplemental Indenture, dated as of June 15, 1994 (the "First Supplemental Indenture"), from theDistrict to the Trustee, $14,165,000 of which are Outstanding. The District has previously issuedits $9,890,000 Celebration Community Development District Special Assessment Bonds, Series1997A (the "Series 1997A Bonds") under and pursuant to the Second Supplemental Trust Indenture,dated as of June 1, 1997 (the "Second Supplemental Indenture"), from the District to the Trustee,of which $4,125,000 remains Outstanding and its $9,475,000 Celebration Community DevelopmentDistrict Special Assessment Bonds, Series 1997B (the "Series 1997B Bonds") under and pursuantto the Third Supplemental Trust Indenture, dated as of June 1, 1997 (the "Third SupplementalIndenture"), from the District to the Trustee, of which $3,340,000 remains Outstanding (the Series1997A Bonds and the Series 1997B Bonds are hereinafter referred to collectively as the “Series1997 Bonds”). The District has also previously issued its $19,760,000 Celebration CommunityDevelopment District Special Assessment Bonds, Series 1999 (the "Series 1999 Bonds") under andpursuant to the Fourth Supplemental Trust Indenture, dated as of May 1, 1999 (the "FourthSupplemental Indenture"), from the District to the Trustee, of which $6,325,000 remainsOutstanding. The District has also previously issued its $18,285,000 Celebration CommunityDevelopment District Special Assessment Bonds, Series 2002A (the "Series 2002A Bonds") underand pursuant to the Fifth Supplemental Trust Indenture, dated as of April 1, 2002 (the "FifthSupplemental Indenture"), from the District to the Trustee and $2,760,000 Celebration CommunityDevelopment District Special Assessment Refunding Bonds, Series 2002B Bonds (the "Series2002B Bonds") under and pursuant to the Sixth Supplemental Trust Indenture, dated as of April 1,2002 (the "Sixth Supplemental Indenture"), each Series of which is Outstanding in the originalaggregate principal amount.

The 2003A Bonds are secured by a separate pledge under the Indenture and such Series doesnot constitute parity Bonds with any other Series and no Assessments levied with respect to theforegoing Bonds are levied on property subject to the Series 2003A Special Assessments.

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The Arvida Development Within Celebration

The information appearing under the captions "The Arvida Development WithinCelebration" and "The Landowner and the Developer" has been furnished by St. Joe ResidentialAcquisitions, Inc., a Florida corporation (the "Landowner") and St. Joe/Arvida Company, L.P.("Arvida" or the "Developer") for inclusion in this Limited Offering Memorandum and, althoughbelieved to be reliable, such information has not been independently verified by the District or itscounsel, or the Underwriter or its counsel, and no person other than the Landowner or the Developermakes any representation or warranty as to the accuracy or completeness of such informationsupplied by them.

Celebration

Overview

Lands within Phase V/South Village 2 are located within the development project known asCelebration. Celebration is approximately 8,075 acres of a planned, mixed-use development locatedin the northwest corner of Osceola County. The approximate developable area is 3,954 acres.Development is nearly complete on the east side of Interstate 4 and is made up of several villages.Village developments include single family and multi-family residential units, commercial, office,retail, a health facility, civic facilities, a Town Center area, an eighteen-hole golf course, and theamenities associated with a large, mixed-use development. Celebration is currently in its ninth yearof development.

The Celebration community is served by Celebration Place, a 125-acre master-plannedcommercial center and Town Center, which is the social, civic, and commercial heart of Celebration.Education in Celebration consists of public schools, including a combined elementary and secondaryschool and a high school is expected to be opened in August, 2003, funded, constructed and operatedby the School Board of Osceola County, Florida, with financial enhancements previously providedby The Celebration Company. Recreational amenities include an 18-hole golf course designed byRobert Trent Jones, Sr. and Robert Trent Jones, Jr., which opened in October 1996, a communitypark adjacent to the lake at Town Center, walking and bike paths and nature trails, four communityswimming pools, tennis courts and park facilities. In addition, Stetson University has a satellitecampus in Celebration.

The residential areas of Celebration feature a complementary blend of style and form,reminiscent of traditional neighborhoods found in notable towns throughout the United States.Custom and production homes, townhouses, and apartments are offered at a variety of prices, arelaid out in accordance with Celebration’s master plan, and are intended to create a livingenvironment that is both aesthetically pleasing and encourages neighborhood interaction.Internationally recognized architects and planners have developed pattern books for the residencesfor Celebration, which reflect architectural styles indigenous to the southern and southeastern UnitedStates constructed prior to 1940.

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On December 2, 2002, the Celebration Company announced the sale of approximately 400acres in Celebration to Four Seasons Hotels and Resorts. The site is contemplated as a multi-useresort including a 425-room luxury hotel, an 18-hole championship golf course, an exclusive enclaveon single-family homes and a fractional ownership Four Seasons Residence Club. A date forcommencement of construction has not yet been determined.

Governance

Celebration is comprised of two community development districts (“CDDs”), the CelebrationCDD and the Enterprise CDD, which were established by rule of the Florida Land and WaterAdjudicatory Commission effective March 29, 1994, pursuant to the provisions of Chapter 190,Florida Statutes. These CDDs were established to provide infrastructure for Celebration.

In addition, Celebration has two community associations, one for residential and one forcommercial properties, which establish rules and enforce covenants on their respective propertyowners.

Background

The real estate on which Celebration is located was originally acquired by a subsidiary ofThe Walt Disney Company in the early 1960's. Master planning of the community began in the mid1980's, and the permitting and public approval process commenced in the early 1990's.

Most of the property owned by subsidiaries of The Walt Disney Company in central Florida,including Celebration, has been located within the Reedy Creek Improvement District, anindependent special district under Florida law ("RCID"). Therefore, RCID, rather than OsceolaCounty, regulated land use within its boundaries. On March 18, 1994, the property contemplatedto include Celebration was deannexed from RCID. Celebration is now subject to land use regulationby Osceola County. In anticipation of such deannexation, a development order was issued byOsceola County and approved by the Florida Department of Community Affairs, permitting thedevelopment within Celebration, which order became effective simultaneously on suchdeannexation (the "Development Order").

Previous Phases of Development within Celebration

Construction of the first phase of development within Celebration commenced in 1994.Celebration’s first residents purchased homes in the Summer of 1996, with Town Center openinglater that year. As of December 2002, public infrastructure had been installed in CelebrationVillage, Celebration West Village, Lake Evalyn, North Village, South Village, Roseville Corner andEast Village as part of Phases 1 though 4. Completed development within the prior phases isdescribed in "Appendix A - Engineer's Report."

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The Arvida DevelopmentPhase V / South Village 2

The Developer, as the project developer for The St. Joe Company, is developing Phase V /South Village 2 (the “Development”), a 175 acre residential community. The Development is thefifth phase of Celebration and is planned to consist of 616 residential units, including 314 single-family and 302 multi-family homes. In addition, the Developer anticipates the Development willinclude a clubhouse, fitness center, spa, swimming pool, open space amphitheater, parks, and trails.The Development will be accessed from Celebration Avenue, a main thoroughfare withinCelebration.

Land Acquisition

Arvida acquired the land within the Development for cash from The Celebration Companyin September, 2002 at a purchase price of $4,500,000.00. As part of the sale, all of the specialassessments related to the 1994 Bonds and the 1997B Bonds were prepaid and there will be no otherspecial assessments of the District on the lands within the Development other the 2003A SpecialAssessments.

Residential Community

The Development will include a variety of product types including attached and detachedsingle family homes and for sale condos. With the exception of the Village series homes, all of thesingle-family homes will be neo-traditional with rear load garage homes. The Village series homesback up to preservation land and as such will have front load garages. The condo units will beconstructed in 8 different buildings ranging from 2 – 5 floors. The anticipated product mix andaverage home/lot prices are summarized below:

Product Type No. Units Lot Size Square Feet Base Home/Lot Price

Single Family

Townhomes 47 28 x 130 1600 - 2400 $208,000 – $312,000Village 44 80 x 130 2600+ $338,000+Cottage 93 55 x 120 1800 - 2800 $234,000 – $364,000Bungalow 130 40 x 110 1600 - 2400 $208,000 – $312,000Subtotal 314

Multi-Family

Condo’s 302 N/A 1600 $200,000Subtotal 302

Total 616

The lots in Phase V/South Village 2 are slightly larger (10 – 15%) than those in previousphases of Celebration. The larger lot sizes allows for the construction of a 2-story home with the

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master bedroom downstairs or a ranch style home, which appeals to the target market as definedbelow.

Arvida will act as both developer and primary homebuilder for all but the Village Serieshomes. Arvida anticipates selling finished lots exclusively to an independent builder, Issa Homesto build the Village Series homes. Issa Homes is currently building in Celebration and has workedwith Arvida or its predecessors for over (20) years in South and Central Florida, specifically withinthe following development projects known as Boca West, Weston, Broken Sound and Victoria Park.Arvida is currently in contract negotiations with Issa Homes, and anticipates contract executionduring first quarter 2003.

Through market research, Arvida believes the target market for Phase V/South Village 2 isprimarily active baby boomers; however, the Development will not be age-restricted. Based onCelebration’s prior sales history Arvida believes approximately 80% of the Development will beprimary homes with the remaining 20% representing second home or investment properties.

Home pre-sales are expected to commence in fourth quarter 2003, with reservationsoccurring as early as the third quarter 2003. Model homes will open during the fourth quarter 2003.The first home closing is anticipated to occur during the first quarter of 2004. Arvida projects thatresidential homes will be sold (i.e. contract secured with deposit and having only a financingcontingency) over a 4.25-year period as set forth in the following table:

2003 2004 2005 2006 2007 Total

Village 3 14 18 9 0 44Cottage 5 25 36 27 0 93Bungalow 5 25 36 42 22 130Townhomes 3 15 6 23 0 47Condo’s 34 90 95 56 27 302Total 50 169 191 157 49 616

The projected absorption rates are based upon estimates and assumptions made by Arvidathat are based in part on market studies. While Arvida considers such estimates and assumptionsreasonable, they are inherently uncertain and subject to significant business, economic andcompetitive uncertainties and contingencies, all off which are difficult to predict and many of whichare beyond the control of Arvida. As a result, there can be no assurance that such absorption rateswill occur or be realized in the manner set forth in the table.

In addition to the foregoing residential development, the Developer anticipates that it willfund from sources other than the proceeds of special assessment bonds the following amenitiespackage for Phase V/South Village 2 of Celebration: 12,000 square foot clubhouse complete withmulti-purpose rooms for games, cards, and billiards; pool; fitness center; spa; and summer kitchen(open air cabana). The Development will include 14 parks, including an amphitheater with seatingabutting a natural preserve. In addition, the Development will have approximately 1.2 miles of

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trails, which will connect to the trail system traversing Celebration. The Developer expects the clubto open during the first quarter of 2004.

As part of the recreational facilities, the club will feature a full-time “Art of Living” Directorwhose job is to operate programs geared towards the active adult. Part of the director’sresponsibility will be to coordinate events for the Phase V/South Village 2 residents, act as acommunity concierge, and create interaction among the residents. Arvida has used this feature atsome of its other developments, including Southwood and Victoria Park. The director will be fundedout of the Phase V/South Village 2 homeowners association budget.

Assessments

It is anticipated that the annual installments of Series 2003A Special Assessments and theprincipal amount of the permanent portion of Assessments on platted parcels comprising PhaseV/South Village 2, as more particularly described under the subcaption “Security for and Source ofPayment of the Series 2003A Bonds – Assessment Methodology,” will be as follows:

Permanent Projected Series 2003A Total AssessmentPar 2003A Bonds/Unit Annual Assessment 2003A Project/Unit (1)

Village $20,255 $1,650 $67,717Cottage 13,503 1,100 37,251Bungalow 12,153 990 20,656Townhomes 9,514 775 21,678Condo’s 5,831 475 16,944

(1) Includes the principal of Assessments which would secure Bonds which may beissued in the future by the District. The Assessments related to such future Bonds,when, as and if issued, are expected to be prepaid prior to sale of a lot or unit to anend user.

Homeowners Association

As noted above, a master homeowners association, the Celebration Residential OwnersAssociation (CROA), enforces covenants in Celebration. Residents of the Development will be apart of CROA and will have the same community rights and privileges as other Celebrationresidents.

In addition, a separate service area will be created for Phase V/South Village 2 specific amenities.These amenities will be managed by a Phase V/South Village 2 homeowners association. Thecondominium units will share the common areas, but will also have its own condominiumassociation.

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Marketing

Homes within the Development will be sold from an on-site sales center. Until theclubhouse is completed, sales will be marketed in the model homes. The Developer anticipatesconstructing 10 model homes, which are scheduled to open fourth quarter 2003. The marketingprogram includes signage both on-site and in the vicinity of the Development, advertisements in realestate periodicals, television commercials, as well as the daily newspapers. The Developer will fundmarketing costs.

Competition

The Developer believes the Development’s residential product is unique relative tocompeting real estate development projects. In general, the Developer believes that theDevelopment will enjoy a competitive advantage, because the community is being designed withthe active adult market in mind, in terms of its residential design and recreational amenities, and assuch, is the only such product within Celebration.

The Landowner and the Developer

The Landowner is one of four operating segments of The St. Joe Company ("St. Joe"). St.Joe is a Florida corporation that is listed on the New York Stock Exchange as "JOE" and is one ofFlorida's leading real estate operating companies. St. Joe is a diversified company, which conductsprimarily all of its business in four reportable operating segments, which are community residentialdevelopment, commercial real estate development and services, forestry and land sales. St. Joe isone of the single largest private landowners in the State of Florida (the "State"). It ownsapproximately 940,000 acres, which is approximately 3% of the land area of the State. Most of theland is timberland, but some is developed property or land suitable for future development. St. Joeis led by Chairman/CEO Peter Rummell and President, CFO and COO Kevin Twomey.

In the community/residential development section, St. Joe's strategy is to develop large-scale,mixed-use communities primarily on company-owned land. Development of master-plannedcommunities is a long-term endeavor, with build-out typically occurring over a five-to-fifteen-yearperiod. St. Joe also intends to develop smaller scale residential projects that offer productive useof existing Company and acquired land.

On November 12, 1997, St. Joe purchased a 74% general partnership interest in St.Joe/Arvida Company, L.P., ("Arvida") through a joint venture with JMB Southeast Development,L.L.C. and JMB Southeast Development L.P. The principal assets acquired by St. Joe and the otherpartners in Arvida were the "Arvida" name, proprietary information systems and the Arvidamanagement team. St. Joe directs most of its community and residential development effortsthrough Arvida.

The Limited Partnership Agreement of the Developer among St. Joe/Arvida Company, Inc.(the "Managing Partner") and JMB Southeast Development, L. L. C. (the "Non-Managing Partner")

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and St. Joe Development, Inc. ("St. Joe Development") and JMB Southeast Development, L. P.("JMB L. P.") gives certain rights to Non-Managing Partner and its affiliates with respect toparticipating as a minority owner (up to 26%) in the Development. The relevant portion of theagreement provides that the Managing Partner and St. Joe Development shall give notice("Development Notice") to the Non-Managing Partner and provide them with certain informationfor them to make an investment decision. In connection with the Development, such DevelopmentNotice has been given and, to date, the option to participate has neither been accepted nor rejected.

St. Joe is currently in negotiations to sell a 26% interest in the Development with an affiliateof JMB L. P. In such event, the entire Development would be transferred into a single-purposeentity owned by affiliates of St. Joe and JMB, L. P. and the new entity would become theLandowner. Arvida, in any event, would remain the Developer pursuant to a managementagreement with the new Landowner.

Projects which have been or are currently being developed by Arvida for St. Joe include thefollowing:

Northwest Florida

WaterColor

Construction continues at WaterColor, a 499-acre southern coastal resort and residentialcommunity on the beaches of the Gulf of Mexico in Walton County, Florida. At full build-out, thecommunity, master planned by Jaquelin Robertson, will include approximately 1,100 residences,100,000 square feet of commercial space, a beach club, tennis club, boathouse and lakefront park.

The beach club and the upscale, 60-room WaterColor Inn are now open. Boating facilitieson Western Lake are complete and in use. A casual lakeside restaurant, with family dining and anauthentic coastal menu, as well as WaterColor’s local gourmet market were also opened during2002. Sales at WaterColor are expected to be completed by 2007 to 2008.

WaterSound

Approximately three miles east of WaterColor on about a mile of beachfront property,WaterSound Beach is being planned as an exclusive and secluded beachfront community alsolocated in Walton County, Florida. Sales of home sites began at WaterSound Beach in the thirdquarter of 2001. This community is planned to include 499 units. Sales continue on the beachfrontmultifamily units designed by Graham Gund.

In October of 2002, the Walton County Board of County Commissioners approvedtransmittal of a Comprehensive Plan Amendment for future phases of WaterSound, known asWaterSound North, to the Florida Department of Community Affairs for state review. Located northof U.S. Highway 98 and south of the Intracoastal Waterway, the preliminary design for WaterSoundNorth calls for approximately 1,250 residential units and a golf course on 1,440 acres. The project

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will require a Development of Regional Impacts ("DRI") process that is expected to get underwayin early 2003 and continue for 12 to 18 months.

The first 18-hole golf course at Camp Creek designed by Tom Fazio and near WaterSoundopened in the Spring of 2001. Fairway cottages and an additional 18 holes of golf are planned.

WindMark Beach

Arvida, in its first step into residential development in Gulf County, Florida, launched itsfirst community there in 2001. WindMark Beach is an 80-acre community under development thatwill offer 110 home sites, many of which will be beachfront. WindMark Beach will also offer a poolclub, several community docks and a conservation area accessed by boardwalks and trails.Predevelopment planning has started for future phases of WindMark Beach on approximately 1,900acres of former timberland along 3.5 miles of beachfront owned by St. Joe. These future phases,planned for 1,500 units, require a DRI process that is expected to get underway in early 2003 andcontinue for 12 to 18 months.

SummerCamp

Planning and entitlements are underway to develop 499 units at SummerCamp, a newbeachfront vacation community located in Franklin County, Florida. Located on approximately 650acres of former timberland, 45 miles south of Tallahassee, SummerCamp is a family destination onthe Gulf of Mexico. During the second quarter of 2002, the Franklin County Commission approvedtransmittal of a Comprehensive Plan Amendment for SummerCamp to the Florida Department ofCommunity Affairs for state review. Final action has been delayed by the Franklin CountyCommission, pending the resolution of state recommendations and comments.

SouthWood

SouthWood is located in southeast Tallahassee, Florida. Plans for SouthWood includeapproximately 4,250 homes and a variety of retail shops, restaurants, community facilities, andoffices. Sales of homes and home sites commenced in the second quarter of 2001. Sales inSouthWood are expected to continue for up to 18 years.

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Central Florida

Victoria Park

Sales commenced at Victoria Park, near Orlando, Florida in 2001. This 1,859 acrecommunity is planned for approximately 4,000 residences built among parks, lakes and conservationareas, walking and bike paths, as well as an 18-hole golf course. The Victoria Hills Golf Clubopened in December 2001 to excellent reviews. Approximately 40% of the land will be retained foropen-space, recreation and conservation, allowing residents to enjoy vistas of natural wildlife andhabitat areas. As additional club/amenity facilities are completed management expects sales activityto continue to increase. Sales at Victoria Park are expected to continue for more than 10 years.

Northeast Florida

St. Johns Golf and Country Club

During 2001, sales commenced at St. Johns Golf and Country Club in St. Johns County,Florida. This community is planned to include 799 units and an 18-hole golf course which openedfor play in 2001. The community swimming pool and fitness center opened in May of 2002. Salesare expected to continue for five to six years.

James Island

James Island is located in Jacksonville, Florida on 194 acres of land acquired by St. Joe andits affiliates. At full build-out, the community is expected to include approximately 365 housingunits. Sales at James Island are expected to be concluded in 2003.

RiverTown

Predevelopment planning is underway at RiverTown, located along the St. Johns River inSt. Johns County, Florida, just south of Jacksonville. RiverTown, situated on approximately 4,300acres, requires a DRI process, which began in October of 2002, and is expected to continue for upto 24 months.

North Carolina and South Carolina

Affiliates of St. Joe and Arvida are currently developing 25 communities located in NorthCarolina and South Carolina.

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Other Arvida Projects

In addition to the projects described above, through a management agreement withArvida/JMB Partners, L.P. (the "Partnership"), Arvida provided development and management,supervisory and advisory services as well as personnel to the Partnership for its residentialcommunities in Florida including: Weston in Broward County, Grand Bay on Longboat Key,Sawgrass Country Club and the Players Club at Sawgrass near Jacksonville, and River Hills CountryClub in Tampa.

The Partnership also formed two 50/50 joint ventures with an unrelated third party to developa residential community in Palm Beach County, Florida and one near Tampa, Florida.

As referenced above, St. Joe is a publicly-traded company listed on the New York StockExchange. Copies of its most recent Form 10-K and Form 10-K filings are available upon requestfrom the General Counsel of St. Joe at (904) 396-6600, or in the archives of the website(www.sec.gov) for the Securities and Exchange Commission (the "SEC"). St. Joe is subject to theinformation requirements of the Securities and Exchange Commission Act of 1934, as amended, andin accordance therewith files reports, proxy statements, and other information with the SEC. Thefile number of St. Joe with the SEC is 001-10466. Such reports, proxy statements, and otherinformation can be inspected and copied at the Public Reference Section of the SEC, Room 1024,450 Fifth Street NW, Judiciary Plaza, Washington, DC, and at the SEC's regional offices in Chicago(Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois). Copies ofsuch materials can be obtained by mail from the Public Reference Section of the SEC at prescribedrates. The most recent Annual Report on Form 10-K of St. Joe on file with the SEC and any otherdocuments and reports filed with the SEC by St. Joe subsequent to the date of such Annual Report(including Forms 10-Q and Forms 10-K) through and including the end of the "underwriting period"(as defined in SEC Rule 15c2-12) are hereby incorporated herein by reference.

All documents subsequently filed by St. Joe pursuant to the requirements of the ExchangeAct after the date of this Limited Offering Memorandum will be available for inspection in the samemanner as described above.

Bondholders' Risks

There are certain risks inherent in an investment in bonds secured by special non-ad valoremassessments issued by a public authority or governmental body in the State of Florida. Certain ofthese risks are described in the preceding section entitled "Security for and Source of Payment ofthe Series 2003A Bonds - Enforcement and Collection of Assessments." Certain additional risksare associated with the Series 2003A Bonds offered hereby. This section does not purport tosummarize all risks that may be associated with purchasing or owning the Series 2003A Bonds and

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prospective purchasers are advised to read this Limited Offering Memorandum in its entirety for amore complete description of investment considerations relating to the Series 2003A Bonds.

1. Receipt of the 2003A Special Assessments is entirely dependent upon their timelypayment by the Developer or builders that purchase lots or parcels from the Developer and,ultimately, individual owners of real property within the District subject to the 2003A SpecialAssessments. In the event of the institution of bankruptcy or similar proceedings with respect to theDeveloper or any other existing or subsequent significant owner of property within the District, therecould be delays in the payment of debt service requirements on the Series 2003A Bonds. As such,bankruptcy of a major landowner could negatively impact the ability of the District to foreclose onproperty or the ability of the County to sell tax certificates in relation to such property. In addition,the remedies available to the Owners of Series 2003A Bonds upon an event of default under theIndenture are in many respects dependent upon judicial actions, which are often subject to discretionand delay. Under existing constitutional and statutory law and judicial decisions, the remediesspecified by federal, state and local law and in the Indenture and the Series 2003A Bonds, includingwithout limitation, enforcement of the obligation to pay Assessments, may not be readily availableor may be limited. The various legal opinions to be delivered concurrently with the delivery of theSeries 2003A Bonds (including the approving opinion of Bond Counsel) will be qualified as to theenforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization,insolvency or other similar laws affecting the rights of creditors enacted before or after suchdelivery. The inability, either partially or fully, to enforce remedies available with respect to theSeries 2003A Bonds could have a material adverse impact on the interest of the Owners thereof.

2. The primary security for the payment of the principal of and interest on the Series2003A Bonds is the timely collection of 2003A Special Assessments levied by the District on certainland within the Development benefitted by the 2003A Project or any portion thereof. The 2003ASpecial Assessments do not constitute a personal indebtedness of the owners of the land subjectthereto, but are secured by a lien on such land. The Developer expects to proceed in its normalcourse of business to sell to the general public lands within the District owned by it and to be servedby the 2003A Project. There is no assurance that the existing or future owners of lands subject tothe 2003A Special Assessments will be able to pay the 2003A Special Assessments or that they willpay such 2003A Special Assessments even though financially able to do so. The assessment of thebenefits to be received by the land within the District as a result of the implementation anddevelopment of the 2003A Project is not indicative of the realizable or market value of the land,which value may be actually higher or lower than the assessment of benefits. To the extent that therealizable or market value of the land specially benefitted by the 2003A Project is lower than theassessment of benefits, the ability of the District to collect delinquent 2003A Special Assessments,if any, as the result of foreclosure actions could be adversely impacted and, provided suchdelinquencies are significant, the ability of the District to make the full or punctual payment of thedebt service requirements on the Series 2003A Bonds could be adversely impacted.

3. The Development may be affected by changes in general economic conditions,fluctuations in the real estate market and other factors. In addition, the Development is subject tocomprehensive federal, state and local regulations and future changes to such regulations. Approvalis required from various public agencies in connection with, among other things, the design, nature

39

and extent of required public improvements, and construction of residential units in theDevelopment in accordance with applicable zoning, land use and environmental regulations for theDevelopment. Although no significant delays are anticipated, failure to obtain such approvals in atimely manner could delay or adversely affect the Development and/or Celebration, which maynegatively impact the desire or ability of the Developer or builders with whom it has entered intocontractual arrangements to pursue development of the Development as contemplated.

4. The willingness and/or ability to pay the 2003A Special Assessments of an ownerof land within the District subject to the 2003A Special Assessments could be affected by theexistence of other taxes and assessments imposed upon the property by the District, the County orother taxing authorities. County, municipal, school and special district taxes, special assessmentsand voter-approved ad valorem taxes levied to pay principal of and interest on bonds, including the2003A Special Assessments( to the extent the same are collected by the Uniform Method), arepayable at one time. Although the lien of the 2003A Special Assessments is of equal dignity withthe liens for taxes and non-ad valorem special assessments upon land, tax increases or the impositionof new taxes or non-ad valorem assessments by public entities whose boundaries overlap those ofthe District may render landowners unwilling or unable to make 2003A Assessment payments; suchfailure to pay could adversely affect the ability of the District to make full or punctual payment ofdebt service requirements on the Series 2003A Bonds.

5. The Series 2003A Bonds may not constitute a liquid investment, and there is noassurance that a liquid secondary market will exist for the Series 2003A Bonds in the event a Holderthereof determines to solicit purchasers of the Series 2003A Bonds. Even if a liquid secondarymarket exists, there can be no assurance as to the price for which the Series 2003A Bonds may besold. Such price may be lower than that paid by the current Holders of the Series 2003A Bonds,depending on the progress of the Development, existing market conditions and other factors.

6. Construction of a portion of the cost of the 2003A Project is dependent upon theDeveloper advancing funds to the District in anticipation of the future issuance by the District offuture Series of Bonds. In the event that the Developer does not fund such advances, there can beno assurance that the District will be able to raise the moneys to complete the 2003A Project.

7. The cost of certain master and most subdivision improvements within theDevelopment, have been and will be paid for by operating funds of, or through the proceeds offinancing arranged by, the Developer. See "The Arvida Development Within Celebration" herein.There is no assurance that the Developer will be able to pay, or arrange to pay, for the cost of theseimprovements.

8. The obligation of the Developer to pay the 2003A Special Assessments securing theSeries 2003A Bonds is the same as that of any other landowner in the Development. Neither theDeveloper nor any other landowner within the Development is a guarantor of, or has any personalliability for, payment of such 2003A Special Assessments. In the event of the failure of theDeveloper or any other landowner in the Development to pay the 2003A Special Assessmentsimposed on the specially benefitted lands owned by them, the District's recourse is limited solelyto exercising remedies against the specially benefitted lands for which payment of 2003A Special

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Assessments have not been made. See "SECURITY FOR AND SOURCE OF PAYMENT OF THE2003A BONDS" and "BONDHOLDERS' RISKS -- Item No. 2."

This section does not purport to summarize all risks that may be associated with purchasingor owning the Series 2003A Bonds and prospective purchasers are advised to read this LimitedOffering Memorandum in its entirety for a more complete description of investment considerationsrelating to the Series 2003A Bonds.

Suitability for Investment

This offering is limited by the Underwriter to accredited investors within the meaning of therules of the Florida Department of Banking and Finance. This limitation of the initial offering toaccredited investors does not denote restrictions on transfer in any secondary market for the Series2003A Bonds. Investment in the Series 2003A Bonds poses certain economic risks. Prospectiveinvestors in the Series 2003A Bonds should have such knowledge and experience in financial andbusiness matters to be capable of evaluating the merits and risks of an investment in the Series2003A Bonds and have the ability to bear the economic risks of such prospective investment,including a complete loss of such investment. Although no dealer, broker, salesman or other personhas been authorized by the District or the Underwriter to give any information or make anyrepresentations, other than those contained in this Limited Offering Memorandum, and, if given ormade, such other information or representations must not be relied upon as having been authorizedby either of the foregoing, each prospective investor will be given access to such additionalinformation, including the benefit of a site visit of the District and the opportunity to ask questionsof the Developer as such investor deems necessary in order to make an informed decision withrespect to the purchase of the Series 2003A Bonds. Prospective investors are encouraged to requestsuch additional information, visit the District and ask such questions. Such requests should bedirected to:

Fran BusbyManaging DirectorPrager, Sealy & Co., LLC9907 Georgetown Pike, Suite 203Great Falls, Virginia 22066Telephone: 703-757-6155

Tax Matters

The Internal Revenue Code of 1986, as amended (the "Code"), includes requirements whichthe District must continue to meet with respect to the Series 2003A Bonds after the issuance thereofBonds in order that interest on the Series 2003A Bonds not be included in gross income for federalincome tax purposes. The District's failure to meet these requirements may cause interest on theSeries 2003A Bonds to be included in gross income for federal income tax purposes retroactive totheir date of issuance. The District has covenanted in the Indenture to take the actions required by

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the Code in order to maintain the exclusion from federal gross income of interest on the Series2003A Bonds.

In the opinion of Bond Counsel, rendered on the date of issuance of the Series 2003A Bonds,assuming continuing compliance by the District with the tax covenants referred to above, underexisting statutes, regulations, rulings and court decisions, interest on the Series 2003A Bonds isexcluded from gross income for federal income tax purposes. Interest on the Series 2003A Bondsis not an item of tax preference for purposes of the federal alternative minimum tax imposed onindividuals and corporations; however, interest on the Series 2003A Bonds is taken into account indetermining adjusted current earnings for purposes of computing the alternative minimum taximposed on corporations. Bond Counsel is further of the opinion upon the date of issuance of theSeries 2003A Bonds that the Series 2003A Bonds and the interest thereon are exempt from taxationunder the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220,Florida Statutes, on interest income or profits on debt obligations owned by corporations as definedtherein.

Except as described above, Bond Counsel will express no opinion regarding the federalincome tax consequences resulting from the ownership of, receipt or accrual of interest on, ordisposition of the Series 2003A Bonds. Prospective purchasers of Series 2003A Bonds should beaware that the ownership of Series 2003A Bonds may result in other collateral federal taxconsequences, including (i) the denial of a deduction for interest on indebtedness incurred orcontinued to purchase or carry Series 2003A Bonds or, in the case of a financial institution, thatportion of an owner's interest expense allocable to interest on a Series 2003A Bond; (ii) thereduction of the loss reserve deduction for property and casualty insurance companies by fifteenpercent (15%) of certain items, including the interest on the Series 2003A Bonds; (iii) the inclusionof interest on Series 2003A Bonds in the earnings of certain foreign corporations doing business inthe United States for purposes of the branch profits tax; (iv) the inclusion of interest on the Series2003A Bonds in passive investment income subject to federal income taxation of certain SubchapterS corporations with Subchapter C earnings and profits at the close of the taxable year; and (v) theinclusion in gross income of interest on Series 2003A Bonds by recipients of certain Social Securityand Railroad Retirement benefits.

Agreement by the State

Under the Act, the State of Florida pledges to the holders of any bonds issued thereunder,including the Series 2003A Bonds, that it will not limit or alter the rights of the issuer of such bondsto own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects subjectto the Act or to levy and collect taxes, assessments, rentals, rates, fees, and other charges providedfor in the Act and to fulfill the terms of any agreement made with the holders of such bonds and thatit will not in any way impair the rights or remedies of such holders.

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Legality for Investment

The Act provides that the Series 2003A Bonds are legal investments for savings banks,banks, trust companies, insurance companies, executors, administrators, trustees, guardians, andother fiduciaries, and for any board, body, agency, instrumentality, county, municipality or otherpolitical subdivision of the State of Florida, and constitute securities which may be deposited bybanks or trust companies as security for deposits of state, county, municipal or other public funds,or by insurance companies as required or voluntary statutory deposits.

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 debtobligations that it has issued or guaranteed and that are or have been in default as to principal orinterest at any time after December 31, 1975 (including bonds or other debt obligations for whichit has served only as a conduit issuer such as industrial development or private activity bonds issuedon behalf of private businesses). The District is not and has not since December 31, 1975 been indefault as to principal and interest on its bonds or other debt obligations.

Continuing Disclosure

The Act requires that financial statements of the District be audited by an independentcertified public accountant at least once a year. The current fiscal year of the District commencesOctober 1 and the audited financial statements are generally available within 180 days after the endof each fiscal year. The Act further provides that the District's budget for the following fiscal yearbe adopted prior to October 1 of each year. Meetings of the District's Board of Supervisors are opento the public and a proposed schedule of meetings for the year is published at the beginning of eachcalendar year. Notice of meetings and the agenda for meetings are published prior to each meeting.

At closing, the District will enter into a Continuing Disclosure Agreement, dated as ofFebruary 15, 2003 (the "Disclosure Agreement"), the form of which is included in Appendix E.Pursuant to the Disclosure Agreement, the District has covenanted for the benefit of Bondholdersto provide certain financial information and operating data relating to the District and the Series2003A Bonds in each year (the "Annual Report"), and to provide notices of the occurrence of certainenumerated material events. Such covenant by the District shall only apply so long as thecorresponding Series 2003A Bonds remain Outstanding under the Indenture. The foregoingcovenant shall terminate upon the termination of the continuing disclosure requirements of S.E.C.Rule 15c2-12(b)(5) (the "Rule") by legislative, judicial or administration action. The AnnualReport will each be filed by the District with each Nationally Recognized Municipal SecuritiesInformation Repository described in the Forms of Continuing Disclosure Agreements attachedhereto as Appendix E as well as any state information depository that is subsequently establishedin the State of Florida (the "SID"). The notices of material events will be filed by the District withthe NRMSIRs or the Municipal Securities Rulemaking Board, and with the SID. In accordance with

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the Rule and pursuant to the Disclosure Agreement, Prager, Sealy & Co., LLC has been appointedas the dissemination agent for all of the foregoing disclosure materials but such function may alsobe performed by the District in the future. The specific nature of the information to be containedin the Annual Reports and the notices of material events are described in Appendix E - Form ofContinuing Disclosure Agreement, which shall be executed by the District at the time of issuanceof the Series 2003A Bonds. The foregoing covenants have been made in order to assist theUnderwriter in complying with the Rule.

In addition to the District, the District has determined that the Landowner and the Developerare obligated parties with respect to the Series 2003A Bonds and they will be obligated to providecontinuing disclosure information in conformity with the Rule and are parties to the DisclosureAgreement.

Enforceability of Remedies

The remedies available to the owners of the Series 2003A Bonds upon an event of defaultunder the Indenture are in many respects dependent upon judicial actions, which are often subjectto discretion and delay. Under existing constitutional and statutory law and judicial decisions,including the federal bankruptcy code, the remedies specified by the Indenture and the Series 2003ABonds may not be readily available or may be limited. The various legal opinions to be deliveredconcurrently with the delivery of the Series 2003A Bonds will be qualified, as to the enforceabilityof the remedies provided in the various legal instruments, by limitations imposed by bankruptcy,reorganization, insolvency or other similar laws affecting the rights of creditors and enacted beforeor after such delivery.

Litigation

There is no litigation of any nature now pending or threatened restraining or enjoining theissuance, sale, execution or delivery of the Series 2003A Bonds, or in any way contesting oraffecting the validity of the Series 2003A Bonds or any proceedings of the District taken withrespect to the issuance or sale thereof, or the pledge or application of any monies or securityprovided for the payment of the Series 2003A Bonds, or the existence or powers of the District.

Absence of Ratings

No application for a rating has been made to any rating agency, nor is there any reason tobelieve that the District would have been successful in obtaining an investment grade rating for theSeries 2003A Bonds had application been made.

Underwriting

Prager, Sealy & Co., LLC (the "Underwriter") has agreed pursuant to a contract with theDistrict, subject to certain conditions, to purchase the Series 2003A Bonds from the District at apurchase price of par less Underwriter's discount of $84,490.00, plus accrued interest from February

44

15, 2003. The Underwriter's obligations are subject to certain conditions precedent and theUnderwriter will be obligated to purchase all of the Series 2003A Bonds if any are purchased. TheSeries 2003A Bonds may be offered and sold to certain dealers, banks and others at prices lowerthan the initial offering prices, and such initial offering prices may be changed from time to time bythe Underwriter.

Experts

The references herein to PBS&J, as the District Engineer, have been approved by said firm,and the Engineering Report, included as Appendix A to this Limited Offering Memorandum, shouldbe read in its entirety for complete information with respect to the subjects discussed therein.Rizzetta & Company, Incorporated, has acted as Financial Consultant to the District with respectto the issuance and delivery of the Series 2003A Bonds. The Financial Consultant has also preparedthe Assessment Methodology and authorized its inclusion in this Limited Offering Memorandum.

Validation

As required by Florida law, the Series 2003A Bonds are a portion of Bonds which wereoriginally validated by final judgment of the Circuit Court of Osceola County, Florida entered onMay 24, 1994, the appeal period for which expired with no appeal having been taken. Of the$405,500,000 previously validated, $120,865,000 aggregate principal amount of Bonds has beenpreviously issued which applied against the issuance authority of the District. In addition, theDistrict issued $2,760,000 of refunding bonds which did not apply against the validated issuanceauthority of the District. The Bonds previously issued were subject to a 20 year maturity limit asthe result of both prior law limitations on the number of annual installments of Assessments and asthe result of the earlier final judgment of validation. Subsequent changes in law have permitted theDistrict to extend the number of annual installments of Assessment to no more than thirty. The2003A Bonds are a portion of $284,635,000 principal amount of Bonds, the maturity of which mayextend to the limits permitted by law, which were validated by final judgment of the Circuit Courtof Osceola County on January 10, 2003. The appeal period expired on February 10, 2003.

Legal Matters

All legal matters related to the authorization, issuance, sale and delivery of the Series 2003ABonds are subject to the approval of Greenberg Traurig, P.A., Miami, Florida, Bond Counsel.Certain legal matters will be passed upon for the Underwriter by its counsel, Nabors, Giblin &Nickerson, P.A., Tampa, Florida. Certain legal matters will be passed upon for the District by itscounsel, Hopping Green & Sams, P.A., Tallahassee, Florida, and for the Trustee by its counsel,Holland & Knight LLP Orlando, Florida.

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Miscellaneous

Any statements made in this Limited Offering Memorandum involving matters of opinionor estimates, whether or not expressly so stated, are set forth as such and not as representations offact, and no representations are made that any of the estimates will be realized.

The references herein to the Series 2003A Bonds and other documents referred to herein arebrief summaries of certain provisions thereof. Such summaries do not purport to be complete andreference is made to such documents for full and complete statements of such provisions.

This Limited Offering Memorandum is submitted in connection with the sale of the Series2003A Bonds and may not be reproduced or used, as a whole or as a part, for any purpose. ThisLimited Offering Memorandum is not to be construed as a contract with the purchaser or the Ownersor Beneficial Owners of any of the Series 2003A Bonds.

This Limited Offering Memorandum has been duly authorized, executed and delivered bythe District.

CELEBRATION COMMUNITYDEVELOPMENT DISTRICT

February 19, 2003 By: /s/ Hal McIntyreChairman

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APPENDIX A

ENGINEERING REPORT

[THIS PAGE INTENTIONALLY LEFT BLANK]

CELEBRATION PHASE 5

SOUTH VILLAGE 2 ENGINEERING REPORT

CELEBRATION COMMUNITY DEVELOPMENT DISTRICT

January 14, 2003

DISTRICT MANAGER

SEVERN-TRENT ENVIRONMENTAL SERVICES, INC./ MOYER & ASSOCIATES

10300 NORTHWEST 11th MANOR CORAL SPRINGS, FLORIDA 33071

DISTRICT ENGINEER

PBS&J 482 SOUTH KELLER ROAD ORLANDO, FLORIDA 32810

DISTRICT REPRESENTATIVE

WALT DISNEY IMAGINEERING 200 CELEBRATION PLACE

CELEBRATION, FLORIDA 34747

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TABLE OF CONTENTS

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Table of Contents TC-1List of Tables TC-3List of Figures TC-4

Section Title Page

1 Introduction

1.1 Introduction 1-1 1.2 Celebration – Phase 1 1-3 1.3 Celebration – Phase 2 1-3 1.4 Celebration – Phase 3 1-3 1.5 Celebration – Phase 4 1-4 1.6 Celebration – Phase 5 South Village 2 1-4 1.7 Celebration – Future Phases 1-4

2 Overall Celebration Project Development Description

2.1 General 2-1 2.2 Enterprise Community Development District 2-1 2.2.1 Celebration Place 2-1 2.3 Celebration Community Development District 2-2 2.3.1 Celebration Village 2-2 2.3.2 Celebration West Village 2-2 2.3.3 Lake Evalyn 2-3 2.3.4 North Village 2-3 2.3.5 South Village 2-3 2.3.6 Roseville Corner 2-3 2.3.7 East Village 2-4 2.3.8 East Village 2 2-4 2.3.9 South Village 2 2-4 2.3.10 Future Developments 2-4

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TABLE OF CONTENTS (Continued)

Section Title Page

3 Overall Celebration Project Proposed Improvements

3.1 General 3-1 3.2 Project Improvements 3-3 3.2.1 Parcel Specific 3-3 3.2.2 Primary Infrastructure 3-3 3.2.3 Mainline Extensions 3-9 3.2.4 Ownership and Maintenance 3-11

4 Phase 5/South Village 2 (2003 Assessments) Project Description

4.1 General 4-1 4.2 South Village 2 Improvements 4-1 4.3 Permitting 4-2 4.4 Construction Status 4-2

5 Engineer's Certification

5.1 Engineer's Certification 5-1

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LIST OF TABLES

Table Title Page

2-1 Celebration Community Development District - Absorption Schedule 2-6 2-2 Enterprise Community Development District - Absorption Schedule 2-8 3-1 Ownership and Maintenance 3-11 3-2 Celebration Improvement Costs 3-12 4-1 Celebration Phase 5 South Village 2 Improvements Total Construction Costs Summary 4-3 4-2 Celebration Phase 5 South Village 2 Improvements Work Element 4-4 4-3 Celebration Special Assessment 2003 A South Village 2 Improvements Parcel Benefit Allocation 4-5 4-4 Celebration Phase 5 South Village 2 Improvements Description 4-6 4-5 Celebration and Enterprise Community Development District Permitting Status 4-7

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LIST OF FIGURES

Figure Title Page

1-1 Location Map 1-5 1-2 Village Location Map 1-6 1-3 Phase 1 Project Limits 1-7 1-4 Phase 2 Project Limits 1-8 1-5 Phase 3 Project Limits 1-9 1-6 Phase 4 Project Limits 1-10 1-7A Phase 5 South Village 2 Project Limits 1-11 1-7B Phase 5 South Village 2 2003 Assessments 1-12 1-8 Future Phase 1-13 2-1a Enterprise CDD Boundaries 2-9 2-1b Enterprise CDD Boundaries 2-10 2-2 Celebration CDD Boundaries 2-11 3-1 Master Roadway Plan 3-13 3-2 Stormwater Master Plan 3-14 3-3 Master Utility Plan 3-15

Section 1 INTRODUCTION

1.1 INTRODUCTION

Celebration is approximately 8,075 acres of a planned, mixed-use development located in the northwest corner of Osceola County as shown on Figure 1-1. The approximate developable area is 3,954 acres. Development has begun on the east side of Interstate 4 and is made up of several Villages (also referred to as parcels). Village developments include single family and multi-familyresidential units, commercial, office, retail, a health facility, civic facilities, a Town Center area, aneighteen-hole golf course, and the amenities associated with a large, mixed-use development.

Celebration is comprised of two community development districts (“CDD’s” or the “Districts”), theCelebration CDD and Enterprise CDD which were established by rule of the Florida Land andWater Adjudicatory Commission effective March 29, 1994, pursuant to the provisions of Chapter 190, Florida Statutes. Creation of these districts provides an efficient mechanism for managing andfinancing the public infrastructure associated with the planning and development of Celebration.The Districts' general limits are delineated on Figure 1-1; the Celebration CDD is predominantlyresidential mixed use in nature, while the Enterprise CDD includes more diverse, predominatelycommercial and mixed-use land uses such as office, retail, and health care facilities.

This Engineering Report has been prepared to identify the public infrastructure necessary to supportthe Celebration development programs. This report describes the Celebration project, its overall infrastructure improvements, the completed Phase 1 and Phase 2 improvements, the partiallyconstructed Phase 3 and 4 public infrastructure construction, and the Phase 5/South Village 2 project as designed. The Phase 5/South Village 2 financing program will be comprised of severalfunding sources:

· Celebration Community Development DistrictSpecial Assessment Bonds, Series 2003 A

· Developer Advances or future Celebration Community Development DistrictSpecial Assessment Bonds

· Enterprise Community Development DistrictUtility Revenue Bonds, Series 1999

· Private Funds

Phase 5/South Village 2 lands will be developed by St. Joe/Arvida Company, L.P. ("Arvida") onbehalf of the landowner ("St. Joe").

Celebration has been under development by The Celebration Company since 1994 and other variousdevelopers. Walt Disney Imagineering has been retained as the District Representative to assist theDistricts in the infrastructure development of the Districts for Phases 1-4.

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Celebration is being developed in several phases, spanning approximately 15 years. Each phase encompasses one or more Villages or portions thereof. Bonds are being issued for each phase of theproject. It should be noted that each phase is being developed and completed without reliance on subsequent phases for a viable development. Similarly, installing the infrastructure by villageand/or by phase has not adversely affected future phases of the project.

Celebration is currently comprised of twelve villages, currently named as follows:

Enterprise CDD Phase 1 Celebration Place

Celebration CDD Phase 1 Celebration Village

Celebration West Village Lake Evalyn

Phase 2 North Village

Phase 3 & 4 South Village 1 South Village Multi-Family

South Village Commercial

Phase 4 Roseville Corner East Village East Village 2

Phase 5 South Village 2

Future Phase Island Village

Figure 1-2 provides a general location of each village within Celebration.

A project of this type generally requires many permits through federal, state and local agencies. Thenecessary permits for Phase 1, Phase 2 and Phase 3 have been acquired. The necessary permits for Phase 4 have been acquired, with the exception of portions of East Village and East Village 2, which are still being prepared or in process. Identification of the various Phase 5/South Village 2permits and their status has been included in this report (see Section 4).

Design and permitting the primary roadways of Phase 4 improvements have been completed.Design and permitting of East Village has been completed. Design and permitting of RosevilleCorner is complete. Design and permitting of East Village 2 is currently underway.

Design and permitting of Phase 5/South Village 2 is currently underway.

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1.2 CELEBRATION - PHASE 1

The construction fund portion of the initial public offerings for special assessment and utilityrevenue bonds (the Series 1994 Special Assessment Bonds and Utility Revenue Bonds), which provided funds for development of Celebration Place, Celebration Village, Celebration WestVillage and Lake Evalyn are over 99% committed. Infrastructure development within Celebration

Place and Celebration Village is complete. Cost savings and project scope revisions allowed for acceleration of improvements within Celebration West Village and Lake Evalyn improvements within Phase 1. These improvements and project acceleration were addressed in the November 30,1995 revision to the Phase 1 Engineering Report. Infrastructure development within Celebration West Village and Lake Evalyn started in June 1996 and is complete. Figure 1-3 indicates thegeneral scope and limits of the Phase 1 project.

1.3 CELEBRATION - PHASE 2

The public offering for the Celebration Special Assessment Bonds, Series 1997 A and Series 1997 B (collectively, the “Series 1997 Bonds”) and the remaining Enterprise Community Development District Series 1994 Bonds provided the necessary funding for the Phase 2 infrastructure servingNorth Village and the extension of Celebration Boulevard to the World Drive Extension/Interstate 4interchange. Also included in the Series 1997 Bonds are costs to reimburse the Reedy Creek Improvement District, a public corporation, for the design and construction of a portion of the World Drive Extension/I-4 Interchange which was necessary to access, and connect to, theCelebration Boulevard South as well as the first phase of beautification improvements to the US 192 shared improvements. The Phase 2 improvements funded from the Series 1999 Bonds arecomplete.

The ECDD Utility Revenue Bonds, Series 1999 included funds to reimburse the costs associated with the Phase 2 utility system improvements. Utility improvements for Phase 2 began in 1997 andare complete.

Figure 1-4 indicates the general areas of the Phase 2 Project. All improvements funded by the Series 1997 Bonds are located within, or provide benefit to, Celebration CDD lands.

1.4 CELEBRATION - PHASE 3

The CCDD Special Assessment Bonds, Series 1999 and the ECDD Utility Revenue Bonds, Series 1999 fund the Phase 3 development.

Phase 3 consists of infrastructure improvements for South Village 1, South Village Multi-Family,South Village Commercial and the design and partial construction of Celebration Boulevard. Figure1-5 indicates the general areas of the Phase 3 project. The Phase 3 improvements are complete.

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1.5 CELEBRATION – PHASE 4

The CCDD Special Assessment Bonds, Series 2002 A and ECDD Utility Revenue Bonds, Series 1999 fund the Phase 4 development.

The Phase 4 development consists of the following areas:

· East Village Infrastructure · East Village 2 Infrastructure · Roseville Corner Infrastructure · Celebration Boulevard Expansion and Extension · US 192 Shared Area Phase II Improvements

Phase 4 improvements are 70% complete.

In previous Engineer’s Reports, East Village, East Village 2 and Roseville Corner were considered as part of South Village 2. South Village 2 is now considered to be a discreet village referred to as "Phase 5" or "South Village 2". Figure 1-6 indicates the general areas of the Phase 4 project.

1.6 CELEBRATION – PHASE 5/SOUTH VILLAGE 2

The CCDD Special Assessment Bonds, Series 2003 A, Developer Advances, and the ECDD Utility Revenue Bonds, Series 1999 will provide the necessary funding for South Village 2 development.

Figure 1-7A indicates the general areas of South Village 2 development.

The Phase 5 improvements include:

· Roadway · Potable water · Wastewater collection and transmission · Reuse water · Parcel earthwork · Stormwater management · Streetlight and alley lighting · Landscaping/hardscaping of public areas

The Phase 5 improvements are fully designed and is in process of construction bidding. Construction is expected to commence in December 2002.

1.7 CELEBRATION – FUTURE PHASES

The future phase of work anticipated for the remainder of Celebration includes Island Village.

Figure 1-8 indicates the general areas of future phases of work.

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Section 2 OVERALL CELEBRATION PROJECT DEVELOPMENT DESCRIPTION

2.1 GENERAL

This Engineering Report includes descriptions for both the Enterprise CDD and the Celebration CDD as the Celebration project encompasses both Districts. Figure 1-1 provides a location map for the two Districts. The Celebration CDD comprises approximately 6,548 acres. Approximately 4,157 acres are set aside as conservation areas for the Reedy Creek Improvement District and there are approximately 2,391 developable acres within the Celebration CDD. The Enterprise CDD comprises approximately 1,527 developable acres. The proposed absorption schedules for the Enterprise and Celebration CDDs are provided in Table 2-1.

2.2 ENTERPRISE COMMUNITY DEVELOPMENT DISTRICT

The Enterprise Community Development District (Enterprise CDD) was established by rule of the Florida Land and Water Adjudicatory Commission effective March 29, 1994, pursuant to the provisions of Chapter 190, Florida Statutes and consists of approximately 1,527 acres of developable land located in unincorporated Osceola County. The limits of this District are provided on Figures 2-1a and 2-1b.

The Enterprise CDD is anticipated to provide for the development of office, medical, retail, recreational, commercial, and other facilities. Development of Celebration Place commenced in Phase 1.

The Enterprise CDD is the owner and operator of the utility systems (potable water, wastewater and reuse water) within the entire Celebration development. The Enterprise CDD has a utility contractor (SEVERN-TRENT) to provide daily operation and maintenance services on the utility systems. The initial systems were constructed and placed in service during 1995/1996 to support the Phase 1 development (Celebration Place, Celebration Village, Celebration West Village and Lake Evalyn). The Phase 2 utility systems have been constructed and were placed in service in 1997/1998 to support the development (North Village). The Phase 3 utility systems have been constructed and were placed into service in 2000 to support the proposed development (South Village 1). Refer to Section 3 for specific information on the utility systems. Phase 4 and Phase 5 utility systems are being designed and/or are under construction.

2.2.1 Celebration Place

Celebration Place is located directly south of U.S. 192 and east of Interstate 4. Celebration Place may offer approximately 979,000 square feet of office space and commercial space. Currently, three office buildings with approximately 575,000 square feet have been constructed and occupied. Phase 1 of the medical center (approximately 488,000 square feet) has been completed. The remaining development of Celebration Place is scheduled to extend through 2005.

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2.3 CELEBRATION COMMUNITY DEVELOPMENT DISTRICT

The Celebration Community Development District (Celebration CDD), pursuant to the provisions of Chapter 190, Florida Statutes, was established by rule of the Florida Land and Water Adjudicatory Commission March 29, 1994. The Celebration CDD comprises approximately 6,548 acres within Osceola County, Florida. A map showing the limits of the Celebration District is provided on Figure 2-2.

The Celebration CDD is anticipated to have a unique mix of single and multi-family residences, with support facilities, civic facilities, retail establishments, recreational amenities and schools. This mix is currently divided into twelve "villages": Celebration Village, Celebration West Village, Lake Evalyn, North Village, South Village 1, South Village 2, South Village Multi-Family, South Village Commercial), Roseville Corner and East Village, East Village 2 and Island Village. A brief description of each village is provided herein. A graphic location of the villages is provided on Figure 1-2 as previously identified.

2.3.1 Celebration Village/Phase 1

Celebration Village is located directly south of Celebration Place, buffered by the 18-hole golf course along the village’s northern boundary. Development of Celebration Village consists of approximately 360 single-family residences, 560 multi-family units and 424,816 square feet of commercial and retail development (plus a 115 room hotel).

The retail/commercial area known as Town Center is located in the Southern portion of Celebration Village. The initial phase of development of the Town Center retail area has been completed, leased and occupied. Celebration Hotel project consisting of 115 rooms was completed in late 1999.

The golf course facility is complete as well as the Lakeside Park area located in the southeastern portion of Celebration Village. The Celebration School completed its construction and opened in 1997.

2.3.2 Celebration West Village/Phase 1

Celebration West Village is located west of Celebration Village between the southwestern portion of the golf course and the existing wetlands. Celebration West Village includes 95 single-family residences and the west portion of the school site. As a result of cost savings and project scope revisions, acceleration of the Celebration West Village infrastructure improvements into Phase 1 was accomplished. Construction of the public infrastructure improvements are complete. No retail or commercial establishments are included in the Celebration West Village development.

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2.3.3 Lake Evalyn/Phase 1

Lake Evalyn is a residential area located to the southeast of Celebration West Village and includes 56 single-family residences. As a result of cost savings and project scope revisions, acceleration of the Lake Evalyn infrastructure improvements into Phase 1 was accomplished. Construction of the public infrastructure improvements are complete. All 56 single-family residences are built. Noretail or commercial establishments are in the proposed Lake Evalyn development.

2.3.4 North Village/Phase 2

North Village, located east of Celebration Village and southeast of Celebration Place, includes 363single-family residences, 315 multi-family units and a small commercial site. A portion of the single-family residences border the eastern portion of the Golf Course. As a result of cost savings and project scope revisions, acceleration of a portion of North Village infrastructure improvements into Phase 1 was accomplished. Construction of both Phase 1 and Phase 2 public infrastructure improvements are substantially complete. As of September 2002, substantially all single-family residences are occupied or under contract. The multi-family construction is anticipated to be complete in late 2002. The small commercial site has been developed as an 12,858 square feet childcare center, and is complete.

2.3.5 South Village/Phase 3&4

South Village is located south and slightly west of the Celebration West Village and is comprised of the following villages:

· South Village 1 · South Village Multi-family · South Village Commercial

South Village 1, which is under construction and part of Phase 3, includes 664 single-family residences and terrace units. The construction of the infrastructure in the area is complete. South Village Multi-family (northwest of South Village 1) is currently under construction. South Village Commercial, located along Interstate 4 adjacent to the interchange at World Drive and Interstate 4, is anticipated to include approximately 1,017,652 square feet of commercial space and 1,000 hotel units. South Village Commercial infrastructure will be constructed in several phases and should be complete in 2003.

2.3.6 Roseville Corner/Phase 4

Roseville Corner is located south of South Village 1 and includes 99 single-family bungalow units. A portion of the lots border wetlands to the north and east. Construction of the public infrastructure improvements are complete. As of September 2002, substantially all single-family residences are occupied or under construction. No retail or commercial establishments are included in this development.

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2.3.7 East Village/Phase 4

East Village is located south of West Village and east of South Village. East Village currently proposes 386 single-family residences and 86 terrace units. Construction is currently underway for the initial phase.

2.3.8 East Village 2/Phase 4

East Village 2 is located southeast of East Village. East Village 2 currently proposes 79 single-family residences. Design and permitting began in summer 2002.

2.3.9 South Village 2/Phase 5

South Village 2 is located south of South Village and Roseville Corner. South Village 2 currently proposes 314 single-family residences and 302 multi-family units. No commercial development is contemplated for South Village/Phase 5. Design and permitting is currently underway.

2.3.10Future Developments

The future development within Celebration is Island Village. This future work is planned to be designed and built within five years. The improvements for this future development are not included in this bond issue.

Table 2-1Celebration Community Development District Absorption Schedule

CELEBRATION CDDThru 2000 2001 2002 2003 2004 2005 2006 2007 2008 Future Total

Residential Celebration Village Estate 89 89 Village 109 109 Cottage 86 86 Garden 0 0 Townhouse 76 76 Apartments 437 437 Town Center Apartments 123 123

Subtotal 920 920

Celebration West Village Estate 18 18 Village 43 43 Cottage 34 34 Garden 0 0 Townhouse 0 0 Apartments 0 0

Subtotal 95 95

Lake Evalyn Estate 0 0 Village 0 0 Cottage 0 0 Garden 56 56 Townhouse 0 0 Apartments 0 0

Subtotal 56 56

North Village Estate 40 4 5 4 5 58 Village 79 79 Cottage 101 1 102 Garden 95 95 Townhouse 29 29 Apartments 315 315

Subtotal 659 4 6 4 5 678

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Table 2-1Celebration Community Development District Absorption Schedule (Continued)

CELEBRATION CDD Thru 2000 2001 2002 2003 2004 2005 2006 2007 2008 Future TotalResidentialSouth Village Estate 5 3 4 2 4 18 Village 95 9 104 Cottage 110 8 3 121 Garden 76 18 1 95 Bungalow 77 0 77 Townhouse 18 13 8 39 Terrace 99 108 207

Subtotal 480 159 16 2 4 661Roseville Corner Estate 0 Village 0 Cottage 0 Garden 0 Bungalow 24 75 99 Townhouse 0 Apartments/Terrace 0

Subtotal 24 75 99East Village Estate 0 10 10 8 28 Village 37 39 0 76 Cottage 39 14 0 53 Bungalow 0 92 12 104 Garden 53 51 0 104 Townhouse 0 10 15 25 Terrace 0 0 86 86

Subtotal 129 216 123 8 476East Village 2 Estate 9 9 Village 35 35 Cottage 0 0 Bungalow 0 0 Garden 35 35 Townhouse 0 0 Terrace 0 0

Subtotal 79 79

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Table 2-1Celebration Community Development District Absorption Schedule (Continued)

CELEBRATION CDD

Thru 2000 2001 2002 2003 2004 2005 2006 2007 2008 Future Total

Residential (Continued)

South Village 2

Estate 0 0 0 0 0

Village 3 14 18 9 0 44

Cottage 5 25 36 27 0 93

Bungalow 5 25 36 42 22 130

Garden 0 0 0 0 0 0

Townhouse 3 15 6 23 0 47

Multi-family 34 90 95 56 27 302

Subtotal 50 169 191 157 49 616

South Village Multi-Family (along Celebration Boulevard South) 726 400 1126

Non-Residential

Celebration Village Commercial

Church (sq. ft.) 22,500 22,500

School (acres) 28.7 29

High School (acres) 34.6

Golf Course (each) 1 1

Golf Course Clubhouse (each) 1 1

Golf Maintenance Facility (each) 1 1

Lakeside Recreation Center (each) 1 1

851 Building (sq. ft.) 15000 15,000

Celebration Business Center (s.f.) 102900 12220 115,120

Town Center Commercial

Office (sq. ft.) 84468 84,468

Retail (sq. ft.) 56578 56,578

Cinema (sq. ft.) 11150 11,150

Inn (rooms) 115 115

Stetson (sq. ft.) 36000 36,000

Undesignated:

Retail (sq. ft.) 46000 46,000

Other Commercial (sq. ft.) 38000 38,000

North Village Commercial Sites (sq. ft.) 12858 10,000 22,858

East Village Commercial Sites (sq. ft.) 35,000 35,000

South Village Commercial Sites (sq. ft.) 150,000 100,925 10,000 100,000 90,000 180,000 160,000 138,227 88,500 1,017,652

South Village Commercial Sites (rooms) 400 500 900

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Table 2-2Enterprise Community Development District Absorption Schedule

ENTERPRISE CDDThru 2000 2001 2002 2003 2004 2005 2006 2007 2008 Future Total

Celebration Place Commercial Sites (sq. ft.) 575,000 130,000 147,000 127,000 979,000Celebration Place Warehouse Sites (sq. ft.) 70,000 70,000Fire Station (sq. ft.) 8,000 8,000Health Center (sq. ft.) 488,000 156,000 644,000

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Section 3 OVERALL CELEBRATION PROJECT PROPOSED IMPROVEMENTS

3.1 GENERAL

This section is intended to provide a general description of the overall Celebration improvements and the amount of bond proceeds that have been spent or are under contract for each phase (i.e., "committed"). As more fully described below, the Phase 1 Improvements are substantially complete and over 99% of the bond funds for that Phase are committed. The same is true for the Phase 2 Improvements (over 99% committed). For Phase 3, approximately 95% of the bonds issued for these Improvements are committed. For Phase 4, approximately 85% of the bonds issued for these improvements are committed. For Phase 5/South Village 2 Improvements to be funded with the Series 2003A Bonds, approximately $1 million has been advanced for design of these Improvements. In addition, the Enterprise CDD 1999 Utility Bonds have been used as planned for the installation of the utilities in Phase 5. Note that all improvements are public in nature. For a specific description of the Phase 5/South Village 2 Improvements, please refer to Section 4.

The Phase 1 improvements located in Celebration Place and Celebration Village as described in the original Phase 1 Engineering Report dated June 15, 1994 are substantially complete. The November 30, 1995 revised Engineering Report approved by Enterprise and CelebrationCommunity Development Districts included the improvements in Celebration West Village, Lake Evalyn and a portion of North Village. These improvements were accelerated into Phase 1 and are substantially complete.

The Phase 2 improvements located in North Village and including Celebration Boulevard South as described in the Phase 2 Engineering Report dated June 1997 are substantially complete.

The type of improvements proposed for Celebration to be constructed, as well as those completed within Phase 1 and 2, by the Districts include, but may not necessarily be limited to, the following:

· Primary roadways and bridges · Parcel (Village)-specific roads and bridges · Streetlights and alley lighting · Domestic water distribution system · Wastewater/sanitary sewer collection system · Reuse (reclaimed) water distribution system · Stormwater management facilities · Drainage collection systems · Off-site roadways and intersection improvements · Wetland compliance · Common area development · Fire/EMS Service facilities

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Phase 3 improvements were divided into several construction packages consisting of the following improvements:

· Roadway · Potable water · Wastewater collection and transmission · Reuse water · Parcel earthwork · Stormwater management · Streetlight and alley lighting · Landscaping/hardscaping of public areas (North Village) · Phase 2 utility improvements reimbursements

The Phase 3 specific areas of improvements included parcel development of South Village 1, South Village Multi-Family, South Village Commercial, the south expansion of Celebration Boulevard, design of Celebration Boulevard expansion, and the design of Celebration Place expansion.

The Phase 4 improvements are being divided into several construction packages. These packages consist of but are not limited to the following improvements:

· Roadway · Potable water · Wastewater collection and transmission · Reuse water · Parcel earthwork · Stormwater management · Streetlight and alley lighting · Landscaping/hardscaping of public areas

The Phase 4 specific areas of improvement include Roseville Corner, East Village, East Village 2, Celebration Roadway Improvements (widening of Celebration Place and the widening and extension of Celebration Boulevard) and US 192 shared improvements as shown on Figure 1-6.

The proposed Phase 5/South Village 2 specifies areas of improvement will also be divided into several construction packages. These packages consist of but are not limited to the following improvements:

· Roadway · Potable water · Wastewater collection and transmission · Reuse water · Parcel earthwork · Stormwater management · Streetlight and alley lighting · Landscaping/hardscaping of public areas

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The proposed Phase 5/South Village 2 specific area of improvement is shown in Figure 1-7.

3.2 PROJECT IMPROVEMENTS

3.2.1 Parcel Specific

The parcel specific improvements are those public infrastructure improvements specifically related to a given village or land use parcel. Examples of parcel specific improvements include roadways and bridges, potable water, wastewater, reuse, and electrical utilities, earthwork, stormwater collection systems, and landscaping/hardscaping of public areas. Further description of the parcel specific improvements is as follows:

· Roads and bridges: The improvements include the parcel's collector roads and secondary residential streets and alleys, streetlights, and regulatory and directional signage.

· Utilities: The improvements include potable water distribution, wastewater/sanitary sewer collection and transmission, reuse water distribution and primary electrical distribution systems.

· Site Development: The improvements include site earthwork for stormwater runoff collection and control, stormwater management and drainage collection systems, landscape and irrigation, hardscape, jogging and nature trails, entry features and parks.

Parcel specific public infrastructure improvements have been installed for Phase 1 areas of Celebration Place, Celebration Village, Celebration West Village, Lake Evalyn and North Village. The improvements for the Phase 2 areas of North Village and Celebration Boulevard South are also complete. The majority improvements for Phase 3 areas of South Village 1, South Village Multi-Family, and South Village Commercial are also complete. Improvements for Phase 4 areas of East Village 1 are near completion and design of East Village 2 is on-going.

3.2.2 Primary Infrastructure

The primary infrastructure improvements are defined as those which benefit and provide access for the District. The primary infrastructure consists of the following categories and is further described herein:

· Primary roadways and bridges · Utility relocations · Common area development · Primary road related utilities · General infrastructure · Fire/EMS Service Facility

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The Districts will be constructing all paving, grading, and drainage systems associated with the following roadways except as otherwise indicated. Future roadways will consist of a stabilized subgrade, soil cement base and asphaltic concrete surface course, consistent with the specifications of the existing roadways. Signage, pavement markings, guardrails, sidewalks, and traffic signals will also be constructed consistent with the specifications of the respective existing improvement.

The designs of the existing district roadways have been prepared in accordance with the current State of Florida Manual of Minimum Standards for Design, Construction and Maintenance of Streets and Highways, Osceola County Road Construction Specifications, AASHTO policies, and the Manual on Uniform Traffic Control Devices. A Master Roadway Plan has been prepared to determine the roadway network geometry and capacity to support the transportation needs of the buildout of Celebration. The master roadway plan is illustrated on Figure 3-1.

Celebration Boulevard

Initially a two lane, both divided and undivided thoroughfare, Celebration Boulevard is approximately 16,800 feet long and provides access from (and within) North Village, Celebration Village, West Village and South Village, currently terminating at a point north of Island Village. The widening of Celebration to four lanes has been completed. Additionally, a right-of-way corridor for a connection from North Village to U.S. 192 has been planned; however, the connection will only be completed should traffic generation warrant.

The Phase 1 improvements included the initial two lanes of Celebration Boulevard from its intersection with the South Village entrance to Celebration Place. This section of Celebration Boulevard is open to traffic. Also included were the four lane improvements within North Village, known as Celebration Boulevard East, which are complete and open to traffic. The Phase 2 improvements, known as Celebration Boulevard South, included the initial two lanes from the World Drive-Interstate 4 interchange to its intersection with the South Village entrance. This section also is complete and open to traffic.

The engineering design and construction for the intersection improvements of Celebration Boulevard South at the Interstate 4 (I-4) interchange and the engineering design for the expansion of Celebration Boulevard are part of Phase 3 and 4.

Celebration Place

Initially Celebration Place was initially a two-lane undivided road, extending from Celebration Boulevard to the bridge over the C-2 Canal, with an approximate length of 3,250 feet. Generally, from this point to its intersection with Celebration Avenue, Celebration Place is a four-lane divided road, approximately 4,100 feet in length. Widening of the two-lane portion to four lanes has recently been completed. The construction of Celebration Place described above is complete and open to traffic. The engineering design of the additional two lanes from Celebration Boulevard to a point east of the C-2 Canal bridge is complete.

Primary Roadways and Bridges

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World Drive Extension/I-4 Interchange

This interchange provides access to and from I-4 at a point between the Reedy Creek and the Southern Connector Extension (S.R. 417). Additionally, the interchange connects to Celebration Boulevard, providing access to I-4 from the CCDD and to World Drive Extension from the ECDD. This interchange was constructed by the Reedy Creek Improvement District on behalf of the FDOT, and is open to traffic. The Series 1997 Bonds provided funding for the Celebration CDD’s share of the cost. Funding for the Enterprise CDD’s share of the cost was provided from the Series 1994 Bond funds.

World Drive Extension

From the I-4 interchange to its intersection with Road B-1 (see Figure 3-1), this roadway has a four-lane divided urban section, expandable to six lanes, with an approximate length of 3,100 feet. From Road B-1 to the US 192 interchange, this road has a rural, four-lane divided typical section, expandable to six lanes, with an approximate length of 2,300 feet. This roadway was constructed by the Reedy Creek Improvement District, and is open to traffic. The Series 1997 bonds provided funding for the Celebration CDD’s share of the cost.

Road B-1

This portion of Road B, located west of World Drive Extension, connects US 192 with World Drive Extension. Its typical urban section consists of two lanes, expandable to four lanes. Approximate length is 5,100 feet. This roadway was constructed by the Reedy Creek Improvement District, and is open to traffic. The Series 1997 bonds provided funding for the Celebration CDD’s share of the cost.

Celebration Avenue

Celebration Avenue is a four-lane divided road, extending from US 192 to the intersection with Celebration Boulevard, and provides access to the Southern Connector Extension (S.R. 417). The portion of Celebration Avenue from the Southern Connector Extension to US 192 was completed by the Florida Turnpike Authority as part of the Southern Connector Extension (S.R. 417) project. The portion of Celebration Avenue from the Southern Connector Extension (S.R. 417) to Celebration Boulevard was included in the Celebration Phase 1 public infrastructure improvements. Celebration Avenue is complete and open to traffic.

Stormwater Drainage and Earthwork

In 1993, Disney Development Company (now known as Walt Disney Imagineering, the Celebration CCD District Representative,) and its assigns received formal approval of the Celebration Stormwater Master Plan from the Reedy Creek Improvement District, as illustrated on Figure 3-2.

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The purpose of the Celebration Stormwater Master Plan is to assure that adequate stormwater management facilities are available to provide stormwater management capacity for the buildout development of Celebration and to meet the regulatory requirements of the project, as listed below:

· Reedy Creek Improvement District (RCID) · South Florida Water Management District (SFWMD) · Osceola County · Florida Department of Environmental Protection (FDEP) · U. S. Army Corps of Engineers (ACOE) · U. S. Environmental Protection Agency (EPA)

The Celebration Stormwater Master Plan identifies peak discharge rates, water quality requirements, 100-year floodplain elevations, groundwater flows. More specifically, the plan includes:

· location and size of ponds and lakes required for stormwater management facilities; · control elevations of ponds and lakes including required water quality treatment

volumes;· peak flow rates, flow volumes and stages for flood events determined within each

basin and within major conveyance areas (i.e., Reedy Creek, C-1 Canal and C-2 Canal);

· compensating storage requirements to mitigate for encroachments into the 100-year floodplain in the basins which encroachments occur;

· wetland evaluations to show that hydroperiods and viability of wetlands are being maintained;

· groundwater impacts quantified as to the effects on flow rates and wetland impacts.

Existing drainage patterns within the Enterprise Community Development District (west side of Interstate 4) generally flow from the northeast to the southwest. All stormwater runoff enters the Celebration Community Development District via Reedy Creek. Existing drainage patterns within the Celebration Community Development District are generally from northwest to southeast, with all stormwater runoff entering Reedy Creek via the Reedy Creek Swamp, the C-1 Canal, the C-2 Canal or sheet flow into the Swamp. Discharge from the Reedy Creek Swamp to the continuation of Reedy Creek beyond RCID's boundaries is controlled by RCID Structure S-40.

For each phase, final design of the proposed stormwater drainage system for the Districts has been, and will be reviewed and approved by RCID, SFWMD, and Osceola County prior to construction. The drainage system will be consistent with the Celebration Stormwater Master Plan and will maintain existing drainage patterns to the greatest extent possible. 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.

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In several areas, the removal of surface drainage from the roadways, and the protection of the road base material from undermining on those roadways, will be accomplished by grassed swales along each side of the roadways. This system will bleed off excess groundwater and convey surface drainage to stormwater retention ponds located along the roadways.

The stormwater retention ponds will be wet detention biological treatment facilities designed to provide for the treatment of stormwater according to Chapter 40E-4 of the Florida Administrative Code. This treatment is required prior to discharge to the Reedy Creek Swamp and associated canals. In addition to the wet detention treatment process, alternative stormwater treatment methods will be considered. Alternative treatment methods include stormwater irrigation reuse, in which stormwater management ponds are utilized as a source of irrigation water, and; alum injection, in which alum is injected into stormwater runoff as it enters ponds.

To date, the stormwater management facilities required to support the Phase 1 thru Phase 3 public infrastructure improvements in Celebration Place, Celebration Village, Celebration West Village, Lake Evalyn and North Village and Celebration Boulevard South have been completed.

Common Area Development

Common area development as it relates to that portion of the primary infrastructure generally includes the following:

· Common area development for the right-of-ways of primary roadways including: landscaping, irrigation system including controls, piping, and heads; and transit stops.

· Entry features at intersection with U.S. 192 and World Drive Extension/Interstate 4 Interchange and major points along the roadways.

· Landscape screening for above ground utility appurtenances. · Sidewalks and hardscape along primary roads.

To date, the common area improvements generally consisting of landscaping, irrigation, sidewalks, hardscape and entry features in Celebration Place, Celebration Village, Celebration West Village, Lake Evalyn, North Village, Celebration Boulevard South , South Village have been completed.

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Road related utilities

The road related utilities include the underground primary electrical duct bank system necessary to support the primary electrical distribution system, street lighting and signalization within the project.

General Infrastructure

General infrastructure may be described as those elements of design and engineering that are necessary to support the primary infrastructure work and the parcel development work. Examples of elements of general infrastructure include work such as conceptual engineering, scheduling, piezometer installation and monitoring, preliminary and final topographic surveys, and other miscellaneous professional services.

Primary Utilities

Construction of the primary infrastructure improvements identified as potable water, wastewater and reuse water, is completed by the Enterprise CDD and provided to the Celebration CDD through an interlocal agreement. The potable water, wastewater and reuse water are supplied to the Enterprise CDD by the City of Kissimmee pursuant to a Large User Agreement between the Enterprise CDD and the City of Kissimmee. A Celebration Master Utility Plan (MUP) has been prepared to determine the necessary potable water, wastewater and reuse water infrastructure to meet the utility demands for the buildout development of Celebration. The master utility mains are shown on Figure 3-3. The primary utility improvements (potable water, wastewater, reclaimed water, electrical and telecommunications) in Celebration Place, Celebration Village, Celebration West Village, Lake Evalyn, North Village, and Celebration Boulevard South and South Village have been completed.

The Enterprise CDD has a utility contractor (Severn-Trent) to provide daily operation and maintenance services on the utility systems. The Enterprise CDD completes its own meter reading, billings and collections for utility service within Celebration. The Enterprise CDD prepares on an annual basis, 5-year flow projections to the City of Kissimmee to reserve treatment plant capacities for the proposed development in the Celebration Absorption Schedule. The City of Kissimmee currently has capacity for the Celebration project and we do not anticipate any capacity issues through completion of the project.

The potable water infrastructure mains range in size from 6" through 24" in diameter. All new potable water mains will be in accordance with the Florida Department of Environmental Protection and Osceola County requirements, meet the design criteria set forth in the Districts' Permit Criteria Manual and include the appurtenant fittings, meters, valves, and valve boxes to effect service to the respective properties and parcels contiguous to the roadways listed in Section 3.2.2. During a fire flow event, potable water will be provided at a pressure of no less than 20 psi at the connection of each village to the primary infrastructure. The determination of fire flow requirements is based on the National Fire Protection Association (NFPA) manual. All new central wastewater collection and transmission systems will be installed within the

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roadways described in Section 3.2.2. The systems will include a series of publically owned manifolded pump stations. Each pump station will collect the raw wastewater within its service area (generally a specific village or portion thereof).

The primary infrastructure includes force mains, ranging in size from 6" though 16", and pump stations, as well as the appurtenant fittings, valves, and flow meters required to connect the primary infrastructure to the City of Kissimmee’s wastewater system.

All new reclaimed water systems will deliver reuse water from the City of Kissimmee’s facility to the Districts and its villages via a looped distribution system located within the roadways described in this section. The reclaimed water main piping system includes pipes, ranging in size from 4" to 16" in diameter. The proposed systems will include appurtenant valves, valve boxes, fittings and meters to effect service to the respective properties and parcels contiguous to the roadways listed in this section.

All new electrical primary and secondary distribution systems and electric service will be provided by Florida Power Corporation (FPC). The proposed systems will consist of direct buried cable and conduit with appropriately spaced pullboxes, switchgear and transformers. All designs and construction will be completed by FPC. The incremental costs of the electrical improvements between overhead and underground facilities will be funded by the Districts. FPC has completed overall electrical system master planning for Celebration to ensure electric service for the proposed buildout of Celebration. The systems installed as part of the Phase 1, Phase 2, Phase 3 and Phase 4 development have been sized to accommodate the proposed development identified in the Celebration Absorption Schedule.

All new telecommunications primary and secondary distribution systems and communications service will be provided by Smart City Telecommunications. The systems will consist of ductbank system with pullboxes and direct buried cable with appropriately spaced telecommunications equipment. All designs and construction will be completed by Smart City Telecommunications. Smart City Telecommunications has completed overall telecommunications master planning for Celebration to ensure communications service for the proposed buildout of Celebration. The systems installed as part of the Phase 1, Phase 2, Phase 3 and Phase 4 development have been sized to accommodate the proposed development identified in the Celebration Absorption Schedule.

3.2.3 Mainline Extensions

In 1993, The Celebration Company (TCC) entered into a Large User Agreement (LUA) with the City of Kissimmee (City) for the provision of water supply, wastewater treatment and disposal and effluent reuse water to the service areas including the Districts. TCC has assigned its interest in the LUA to the Enterprise CDD.

The City is providing potable water to the Districts’ land east of Interstate 4 through the connection of its water system infrastructure to that of the Districts’ at the mainline connection point located east of Interstate 4. The City will provide potable water to the Enterprise CDD’s land west of Interstate 4 at a proposed mainline connection point just south of U.S. 192 and west of World Drive.

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The City, by agreement, will provide the potable water at a minimum pressure of 45 pounds per square inch (psi.) The potable water will meet required treatment levels designated by the FDEP and the SFWMD.

The City is providing the wastewater treatment and disposal to the Districts’ land east of I-4 through the connection of the City wastewater system infrastructure to that of the Districts’ at the mainline connection point located east of Interstate 4. The City will provide wastewater service to the Enterprise CDD’s land west of Interstate 4 at a proposed master wastewater lift station facility just south of U.S. 192 in the Enterprise CDD adjacent to Road B-1. The mainline extension pump station, located in the Enterprise CDD, pumps the raw wastewater to the City's Wastewater Treatment Facility (WWTF).

The Districts have agreed to use reclaimed water from the City's WWTF for irrigation and water closet toilet flush, as permitted by law, throughout the Districts. Therefore, a reclaimed water system, similar to a potable water system, will be included as part of the wastewater system.

The mainline connection system and pump stations east of Interstate 4 were constructed in 1995/1996 as part of the Phase 1 improvements and are operational. All the mainline utility improvements were designed based on the anticipated full buildout development of Celebration. There are no current anticipated issues in obtaining utility capacity from the City of Kissimmee.

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3.2.4 Ownership and Maintenance

The ownership and maintenance responsibilities for the infrastructure improvements at Celebration vary by the improvement as noted in the following:

Table 3-1 Ownership and Maintenance

Improvement Ownership Maintenance

Roadway System - curb & gutter and pavement (back of curb to back of curb)

Osceola County Osceola County (Street sweeping will be completed by the Districts)

Stormwater Management System (roadway pipes)

Osceola County Osceola County

Stormwater Management System (joint-use ponds)

Districts Districts

Roadway Underdrain System Osceola County Osceola County

Wastewater Collection and Transmission System

Enterprise Community Development District

Enterprise Community Development District

Potable Water Distribution System Enterprise Community Development District

Enterprise Community Development District

Reclaimed Water Distribution System

Enterprise Community Development District

Enterprise Community Development District

Mainline Utility Extensions City of Kissimmee City of Kissimmee

Landscaping along rights-of-way Districts Adjacent Land Owner

Park Areas Celebration Community Development District or Residential Property Owners Association

Celebration Community Development District or Residential Property Owners Association

Walkway and Trail System Districts Districts

Alleys Celebration Community Development District

Celebration Community Development District

Landscaped Open Spaces Districts Districts

Recreation Center Residential Property Owners Association

Residential Property Owners Association

Multi-Family Parcel Multi-Family Residential Property Owners Association

Multi-Family Residential Property Owners Association

Table 3-2Celebration Improvement Costs

AvailableConstruction Construction

Funds PhaseBOND SERIES

ENTERPRISE WATER AND SEWER REVENUE BONDS, Series 1994 $9,076,788 PHASE 1ENTERPRISE WATER AND SEWER REVENUE BONDS, Series 1999 $13,338,483 *** PHASE 2, 3, 4 & 5

Total $22,415,271

ENTERPRISE SPECIAL ASSESSMENT BONDS, Series 1994 $11,053,352 PHASE 1, 2, 3 & 4Total $11,053,352

CELEBRATION SPECIAL ASSESSMENT BONDS, Series 1994 $49,273,899 PHASE 1CELEBRATION SPECIAL ASSESSMENT BONDS, Series 1997 A & 1997 B $15,270,268 PHASE 2CELEBRATION SPECIAL ASSESSMENT BONDS, Series 1999 $17,939,549 PHASE 3CELEBRATION SPECIAL ASSESSMENT BONDS, Series 2002 A $15,825,398 * PHASE 4CELEBRATION SPECIAL ASSESSMENT BONDS, Series 2003 A and Developer Advances $11,137,089 ** PHASE 5 Total $109,446,203

*Total CCDD Phase 4 construction cost is $26,341,847. $15,825,398 is funded from the Series 2002 A Bonds.**Total Phase 5/South Village 2 construction cost is $13,299,074. The other sources of funding includes Enterprise CDD $1,913,385, private funding of $248,600, and Celebration CDD Assessment $11,137,089.*** $1,868,767 of the Enterprise Water and Sewer Revenue Bonds, Series 1999 is funding South Village 2 utilities.

Phase 5/South Village 2

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Section 4 PHASE 5/SOUTH VILLAGE 2 (2003 A ASSESSMENTS) PROJECT DESCRIPTION

4.1 GENERAL

The CCDD Special Assessment Bonds Series 2003 A (combined with utility funding from Enterprise CDD, developer advances/future Celebration CDD assessment bond issue, and a small amount of private funds) will provide the necessary funding for infrastructure for South Village 2. Utility improvements for South Village 2 will be funded by the ECDD Utility Revenue Bonds Series 1999.

Phase 5/South Village 2 may be completed, with all the necessary infrastructure to support the development program, without reliance on subsequent phases. Figure 1-7A indicates the general areas to be developed as part of the South Village 2 Project.

4.2 PHASE 5/SOUTH VILLAGE 2 IMPROVEMENTS

The Phase 5 improvements will be divided into several construction packages. Those packages consist of the roadway, potable water, wastewater collection and transmission, reuse water, parcel earthwork for the collection and control of stormwater runoff, stormwater management, streetlight and alley lighting, sidewalks and trails and landscaping/hardscaping of public area improvements for South Village 2.

The Phase 5/South Village 2 financing program will be comprised of the Celebration CDD Special Assessment Bonds, Series 2003 A and other funding. The improvement costs and anticipated funding sources for Phase 5/South Village 2 are shown in Table 4-1.

Table 4-2 provides a more detailed summary of the South Village 2 costs by funding source and by type of work element. The estimated construction costs for the South Village 2 improvements were prepared based upon master plans and preliminary engineering designs and utilized comparable unit prices from previous Phases' actual bidding results and from comparable information on similar projects within Central Florida.

Table 4-4 summarizes the Parcel benefit allocations of the proposed public infrastructure improvement costs by major work element to the Celebration CDD, Series 2003 A Bonds and other sources. The benefit allocation between Districts was determined based on anticipated trip generation contained in the traffic engineering reports for Celebration.

4.3 PERMITTING

Permits for Phase 5/South Village 2 are being prepared and are scheduled to be under review by the respective regulatory agencies in Fall 2002. There are no anticipated delays in permitting the District infrastructure improvements. A summary of the District wide and Phase 3, 4 and 5 permits are summarized in Table 4-6.

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4.4 CONSTRUCTION STATUS

Construction is scheduled to begin in Fall 2002 and continue through Spring 2004.

SouthVillage 2

CCDD Assessment ** 11,137,089ECDD Utility Series 1999 * 1,913,385Private Funding 248,600

CDD Total 13,299,074

** These amounts will be funded from both the Series 2003A Bonds as well as developer advances/future assessment bond series.

* The $1,913,385 is a portion of Enterprise Utility Series 1999 issue.

Table 4-1Celebration South Village 2 Improvements

Total Construction Costs Summary

SOUTH VILLAGE 2

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SouthMajor Work Element Village 2Construction

Roads and Bridges 2,672,325Earthwork 2,176,715Stormwater Management Systems 1,118,879Common Area Development/Parks/Trails 2,686,257Streetlights 457,992

Subtotal 9,112,168

Soft CostsProfessional Services 935,936Project Management 926,720Contingency 162,265

Subtotal 2,024,921

CCDD Assessment Total 11,137,089

ECDD Utility Revenue Total 1,913,385

CDD TOTAL $13,050,474

Table 4-2Celebration South Village 2 Improvements

Work Element

SOUTH VILLAGE 2

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Quarter CCDD Assessment Total2002 Qtr. 1 (Jan/Feb/Mar) 14,061 Qtr. 2 (Apr/May/June) 71,410 Qtr. 3 (July/Aug/Sept) 399,874 Qtr. 4 (Oct/Nov/Dec) 520,658

Subtotal 1,006,003

2003 Qtr. 1 (Jan/Feb/Mar) 4,374,923 Qtr. 2 (Apr/May/June) 2,457,754 Qtr. 3 (July/Aug/Sept) 1,892,333 Qtr. 4 (Oct/Nov/Dec) 1,326,587

Subtotal 10,051,597

2004 Qtr. 1 (Jan/Feb/Mar) 79,489

Subtotal 79,489

CCDD Assessment Total 11,137,089

(CCDD Assessment)

SOUTH VILLAGE 2

Table 4-3Celebration South Village 2 Improvements

Cash Flow% Allocation

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Table 4-4Celebration Phase 5 Improvements Description

Category Work Element Item Cost DescriptionParcel Specific - South Village 2

Roads & Bridges Residential Roadways and Alleys Design and construction of residential roadways and alleys, inclusive of the associatedearthwork, drainage, paving, curb and gutter, sidewalks, signing, marking, signalization, roadway lighting and all other public improvements normally installed coincident with roadway improvements.

Stormwater Management Stormwater System Design and construction of all of the necessary stormwater management facilities necessary to support the Phase 5 development, inclusive of ponds, control structures (weirs), storm sewer systems, retaining walls, pond plantings and all other improvements normally installed coincident with these types facilities.

Common Area Development Roadway Landscaping Design and construction of the landscaping, irrigation, hardscape and all other improvements normally installed coincident with these types of improvements for residential roadways and alleys to be further detailed in design documents.

Entry Features Design and construction of minor entry features and other 'themed' features inclusive of irrigation, lighting and all other improvements normally installed coincident with these types of improvements at the Village entrances.

Parks and Trails Design and construction of the landscaping, irrigation, hardscape and all other improvements normally installed coincident with these types of improvements for the public parks, recreational areas, and a trail 'network'.

Roadway Related Utilities Design and construction of the ductbank system for undergrounding of utilities associated with street lights, electrical and telecommunications distribution systems and traffic signalization necessary to support the Phase 5 Village development. Also includes the capital costs for the street lights for residential roadways and alleys.

General Infrastructure Professional Fees Primarily design and engineering costs necessary to support the Phase 5 infrastructure development.

Note: All quantities represent approximate estimates derived from current best information and are subject to change/revision as a result of final design and/or construction. Quantities have been rounded.

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Table 4-5 Celebration and Enterprise Community Development District

Permitting Status

a Although Districts have a permit for the taking of the gopher tortoises and their habitats; Districts are implementing a relocation plan in lieu of taking the tortoises.

b Includes conditions for Walker Ranch 4-7

Permit Status

Districts Wide

Conceptual Permit- SFWMDb Received- Permit Number 48-00714-S

ACOE Long Term Permitb Received- Permit Number 199101901 (IP-GS)

DEP Long Term Permitb Received- Permit Number #48, #49, and 532039239

FDEP Potable Water Permit- Mainline Extension Received - Permit Number WD49-250303

FDEP Wastewater/Reuse Permit- Mainline Extension Received - Permit Number CS49-250304

Florida Freshwater Fish and Game Commission Permit for the Taking of Gopher Tortoises and Their Burrows - property wide

Received - Permit Number OSC#4 (dated November 12, 1992)a

Osceola County - Approved PUD Guides all development in Districts. Received.

Village Specific (Phase 5 Improvements only)

Modification to SFWMD Permit This project will modify the project wide SFWMD Conceptual Permit. South Village 2 permit will be processed fall 2002.

FDEP Potable Water Permit South Village 2 permits will be processed fall 2002.

FDEP Wastewater Permit South Village 2 permits will be processed fall 2002.

Osceola County- Final Plat To be submitted fall 2002.

Osceola County Construction Permit Permits will be processed fall 2002.

ACOE & FDEP Dredge and Fill Permit Notification required for each project per project wide permits.

Environmental Protection Agency (EPA) Dewatering Discharge Permit Exempt- used during construction. Water to be discharged to swales then to waters of the state resulting in a non-point discharge.

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Section 5 ENGINEER'S CERTIFICATION

5.1 ENGINEER'S CERTIFICATION

In our opinion, the improvements’ cost estimates are fair and reasonable and we have no reason to believe that the improvements described herein cannot be constructed and installed at such costs and in the construction time frames as described in this report. The estimated probable construction costs for Phase 5 were determined utilizing comparable unit prices obtained from Phase 1, 2, 3 and 4 actual bidding and contract documents and market prices within Central Florida. We expect that all improvements to be constructed with the CCDD Series 2003 A, and Developer Advances/Future Assessment Bond proceeds can be completed in 2004. We, therefore, believe that the District will be well served by the improvements discussed in this report. The improvements, if constructed to the designs described herein, will be sufficient to support the expected development program as described in Section 3 of this Engineering Report.

I hereby certify that the foregoing is a true and correct copy of the Engineering Report for Phase 5 South Village 2 of the Celebration Community Development District.

Kathleen S. Leo, P.E. Florida Registration No. FL51419 PBS&J

APPENDIX B

FORMS OF MASTER INDENTURE AND SUPPLEMENTAL INDENTURE

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APPENDIX C

FORM OF OPINION OF BOND COUNSEL

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FORM OF OPINION OF BOND COUNSEL

SERIES 2003A BONDS

Upon delivery of the Series 2003A Bonds in definitive form, Greenberg Traurig, P.A., Bond Counsel, proposes to render its final approving opinion with respect to such Series 2003A Bonds in substantially the following form:

February 27, 2003

Board of SupervisorsCelebration Community Development DistrictOsceola County, Florida

Celebration Community Development District(Osceola County, Florida)

$6,035,000 Special Assessment Bonds, Series 2003A

Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance by the CelebrationCommunity Development District (the “Issuer”) of its $6,035,000 aggregate principal amount of Special Assessment Bonds, Series 2003A, issued and delivered on this date (the “Bonds”) pursuant to the constitution and laws of the State of Florida, particularly, the UniformCommunity Development District Act of 1980, Chapter 190, Florida Statutes, as amended, and other applicable provisions of law (collectively, the “Act”) and resolutions duly adopted by the Issuer on April 4, 1994 and February 19, 2003 (collectively, the “Resolution”). The Bonds are being further issued and secured by a Master Trust Indenture dated as of June 15, 1994 (the “Master Trust Indenture”), by and between the Issuer and SunTrust Bank, as trustee (the “Trustee”), as supplemented by a Seventh Supplemental Trust Indenture dated as of February 15, 2003 (the “Seventh Supplemental Trust Indenture”) and together with the Master TrustIndenture, the “Indenture”) by and between the Issuer and the Trustee. Capitalized terms used herein without definitions have the meanings ascribed thereto in the Indenture.

The Bonds are being issued for the purposes of providing funds to (i) reimburse the Developer for advances made to or on behalf of the Issuer under the Developer FundingAgreement for interim financing of the 2003A Project, (ii) pay a portion of the costs of the acquisition, construction and equipping of the 2003A Project, (iii) pay capitalized interest on the Bonds through November 1, 2004, (iv) the funding of the 2003A Debt Service Reserve Account in the amount of the Debt Service Reserve Requirement in respect of the Series 2003A Bondsand (v) pay the costs of issuance of the Bonds. The Bonds are issuable as fully registered bonds in denominations of $5,000 or any integral multiple thereof. The Bonds mature at the times and bear interest payable at the rates as provided in the Indenture and the Resolution. The Bonds are redeemable upon the terms and conditions and in the manner stated in the Indenture and the Resolution.

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Board of SupervisorsFebruary 27, 2003Page 2

In order to secure the payment of the Bonds, and subject to the terms of the Indenture, the Issuer has pledged to the holders of the Bonds, and granted a lien to the holders of the Bonds on, the Pledged Revenues.

We have examined the Act, the Resolution, the Indenture and such certified copies of the proceedings of the Issuer 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 Issuer furnished to us, without undertaking to verify such representations by independent investigation.

Based on the foregoing, we are of the opinion that:

1. The Issuer is duly created and validly existing as a local unit of special purpose government of the State of Florida created in accordance with the Act, with the power to execute the Indenture, to perform its obligations thereunder and to issue the Bonds.

2. The Indenture has been duly executed by the Issuer. The Indenture creates a valid pledge of the Pledged Revenues and constitutes a valid and binding obligation of the Issuer enforceable against the Issuer in accordance with its terms.

3. The issuance and sale of the Bonds have been duly authorized by the Issuer and, assuming the due authentication thereof, the Bonds constitute valid and binding limitedobligations of the Issuer, payable in accordance with, and as limited by, the terms of the Indenture.

4. All conditions prescribed in the Indenture as precedent to the issuance of the Bonds have been fulfilled.

5. The Internal Revenue Code of 1986, as amended (the "Code") includesrequirements which the Issuer must continue to meet after the issuance of the Bonds in order that interest on the Bonds not be included in gross income for federal income tax purposes. The failure of the Issuer to meet these requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to their date of issuance. The Issuer has covenanted in the Indenture to take the actions required by the Code in order to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds. The Issuer has full legal power and authority to comply with such covenants.

Under existing statutes, regulations, rulings and court decisions, subject to the assumption stated in the following paragraph, interest on the Bonds is excludable from the gross income of the owners thereof for federal income tax purposes. Furthermore, interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed onindividuals and corporations; however, interest on the Bonds is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on

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certain corporations. We express no opinion regarding other federal tax consequences resultingfrom the ownership, receipt or accrual of interest on, or disposition of the Bonds.

In rendering the opinion expressed above, we have assumed continuing compliance with the tax covenants referred to above that must be met after the issuance of the Bonds in order that interest on the Bonds not be included in gross income for federal tax purposes.

6. The Bonds and the interest thereon are exempt from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest, income or profits on debt obligations owned by corporations, as defined therein.

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 officialcapacities 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.

The opinions set forth in numbered paragraphs 2 and 3 above are subject to state and federal laws relating to bankruptcy, insolvency, reorganization, moratorium and similar laws, and to equitable principles, affecting the enforcement of creditors' rights generally, and to the exercise of judicial discretion in appropriate cases.

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

Respectfully submitted,

GREENBERG TRAURIG, P.A.

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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 February15, 2003 is executed and delivered by the Celebration Community Development District (the"District"), St. Joe/Arvida Company, L.P. and St. Joe Residential Acquisitions, Inc. (the"Developer"), and Prager, Sealy & Co., LLC, as Dissemination Agent (the "Dissemination Agent")in connection with the issuance of $6,035,000 Special Assessment Bonds, Series 2003A (the"Bonds"). The Bonds are being issued pursuant to a Master Trust Indenture dated as of June 15,1994 and a Seventh Supplemental Trust Indenture dated as of February 15, 2003 between theDistrict and the Dissemination Agent (collectively, the "Indenture"). The District, the Developerand the Dissemination Agent covenant and agree as follows:

1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executedand delivered by the District, the Developer and the Dissemination Agent to provide informationrequired in Section 4.05 of the Seventh Supplemental Trust Indenture. The District represents thatthe information is consistent with the requirements of S.E.C. Rule 15c2-12(b)(5).

The provisions of this Disclosure Agreement are supplemental and in addition to theprovisions of the Indenture with respect to reports, filings and notifications provided for therein, anddo not in any way relieve the District, the Dissemination Agent or any other person of any covenant,agreement or obligation under the Indenture (or remove any of the benefits thereof) nor shallanything herein prohibit the District, the Dissemination Agent or any other person from making anyreports, 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 toany capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, thefollowing capitalized terms shall have the following meanings:

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

"Disclosure Representative" shall mean the District Manager of the District or his or herdesignee, or such other officer or employee as the District shall designate in writing to theDissemination Agent from time to time.

"Dissemination Agent" shall mean initially, Prager, Sealy & Co., LLC and shall also meanany successor Dissemination Agent, including the District, designated in writing by the District andwhich has filed with the District and Dissemination Agent a written acceptance of such designation.

"Listed Events" shall mean any of the events listed in Section 5(a) of this DisclosureAgreement.

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"National Repository" shall mean any Nationally Recognized Municipal SecuritiesInformation Repository for purposes of the Rule. Currently, the following are NationalRepositories:

Bloomberg Municipal Repository100 Business Park DriveSkillman, New Jersey 08558Phone: (609) 279-3225Fax: (609) 279-5962http://www.bloomberg.com/markets/muni_contactinfo.htmlEmail: Munis@Bloomberg.com

DPC Data Inc.One Executive Drive Fort Lee, NJ 07024Phone: (201) 346-0701Fax: (201) 947-0107http://www.dpcdata.comEmail: nrmsir@dpcdata.com

FT Interactive DataAttn: NRMSIR100 William StreetNew York, New York 10038Phone: (212) 771-6999Fax: (212) 771-7390 (Secondary Market Information)(212) 771-7391 (Primary Market Information)http://www.interactivedata.comEmail: NRMSIR@FTID.com

Standard & Poor’s J. J. Kenny Repository55 Water Street45th FloorNew York, NY 10041Phone: (212) 438-4595Fax: (212) 438-3975www.jjkenny.com/jjkenny/pser_descrip_data_rep.htmlEmail: nrmsir_repository@sandp.com

"Participating Underwriter" shall mean any of the original underwriters of the Bondsrequired to comply with the Rule in connection with offering of the Bonds.

"Repository" shall mean each National Repository and each State Repository.

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"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commissionunder the Securities Exchange Act of 1934, as the same may be amended from time to time.

"State Repository" shall mean any public or private repository or entity designated by theState as a state repository for the purposes of the Rule.

"Tax-exempt" shall mean that interest on the Bonds is excluded from gross income forfederal income tax purposes, whether or not such interest is includable as an item of tax preferenceor otherwise includable directly or indirectly for purposes of calculating any other tax liability,including any alternative minimum tax.

3. Provision of Annual Reports.

(a) Subject to the following sentence, the District shall provide the AnnualReport 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, 2003. The Annual Report may be submittedas a single document or as separate documents comprising a package, and may cross-reference otherinformation as provided in Section 4 of this Disclosure Agreement. The District shall, or shallcause the Dissemination Agent to, provide to each Repository the components of an Annual Reportwhich satisfies the requirements of Section 4(a) of this Disclosure Agreement within thirty daysafter same becomes available.

(b) If by the 180th day after the close of the District's fiscal year, theDissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shallnotify the District in writing that the District has not complied with its obligations under subsection(a) above.

(c) If the Dissemination Agent is unable to verify in writing from the District thatthe District has filed or caused the Dissemination Agent to file an Annual Report with theRepositories by the date required in subsection (a) above, the Dissemination Agent shall send anotice to each Repository 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 Reportthe 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 report with the District certifying that the Annual Report has been provided pursuant to thisDisclosure Agreement, stating the date(s) it was provided and listing all the Repositories to whichit was provided.

4. (a) Content of Annual Reports. The District's Annual Report shall contain orincorporate by reference the following:

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(i) The amount of 2003A Assessments levied for the most recent year.

(ii) The amount of 2003A Assessments collected from the propertyowners.

(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 2003AAssessments due in any year, a list of delinquent property owners.

(iv) If available, 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. TheDistrict shall provide any Bondholder with this information more frequently than annually withinthirty (30) days of the written request of the Bondholder.

(vi) The total amount of Bonds Outstanding.

(vii) The amount of principal and interest to be paid in the current year.

(viii) The most recent audited financial statements of the District.

To the extent any of the items set forth in subsections (i) through (vii) above are includedin the audited financial statements referred to in subsection (viii) above, they do not have to beseparately set forth. Any or all of the items listed above may be incorporated by reference from otherdocuments, including official statements of debt issues of the District or related public entities,which have been submitted to each of the Repositories or the Securities and Exchange Commission.If the document incorporated by reference is a final official statement, it must be available from theMunicipal Securities Rulemaking Board. The District shall clearly identify each such otherdocument so incorporated by reference.

(b) The parties to this Disclosure Agreement agree to assist the District andDissemination Agent in preparing and providing the information necessary to prepare the AnnualReport.

(c) The financial statements provided by the District shall be audited.

(d) The Developer ( so long as it is an owner or optionee of at least 25% of theproperty subject to the 2003A Assessments) shall also prepare reports no later than thirty (30) daysafter the end of each quarter and provide these reports to the Dissemination Agent and to anyBondholders that request them. These quarterly reports shall address:

(i) The percentage of infrastructure improvements that have beencompleted with the proceeds of the Bonds.

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(ii) The number of homes planned on property which is being assessedto repay the Bonds.

(iii) The number and type of property (lots, parcels, raw land, etc.) soldto builders.

(iv) The number of homes constructed.

(v) The number of homes occupied.

(vi) The number of units, type of units and square footage of commercialproperty or other non-residential uses planned on property which is being assessed to repay theBonds.

(vii) The number and type of property (parcels, raw land, etc.) sold for non-residential development, if any.

(viii) The square footage of non-residential property constructed, if any.

(ix) The anchor (more than 10% of the square footage) tenants ofnonresidential property, if any.

(x) The estimated date of complete build-out.

(xi) Whether the Developer has made any bulk sale of the land withinthe District other than in the ordinary course of business.

(xii) The status of development approvals for the Development.

5. Reporting of Significant Events.

(a) This Section 5 shall govern the giving of notices of the occurrence of any ofthe following events:

1. Delinquency in payment when due of any principal or interest on theBonds.

2. Occurrence of any Event of Default under and as defined in theIndenture (other than as described in clause 1. above).

3. Amendment to the Indenture or this Disclosure Agreement modifyingthe rights of the owners of the Bonds.

4. Giving a notice of optional or unscheduled redemption of any Bonds.

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5. Defeasance of the Bonds or any portion thereof.

6. Any change in any rating of the Bonds.

7. (A) Receipt of an opinion of nationally recognized bond counselto the effect that interest on the Bonds is not Tax-exempt; or

(B) Any event adversely affecting the Tax-exempt status of theBonds, including, but not limited to:

(i) Any audit, investigation or other challenge of the tax-exempt status of the Bonds by the Internal Revenue Service or in any administrative or judicialproceeding; or

(ii) The issuance of any regulation, decision or otherofficial pronouncement by the Internal Revenue Service or other official tax authority or by anycourt adversely affecting the tax-exempt status of the bonds or bonds of the same type as the bondsor financing structures of the same type as financed by the Bonds.

8. Any unscheduled draw on the Reserve Fund reflecting financialdifficulties.

9. Any unscheduled draw on credit enhancements reflecting financialdifficulties.

10. The substitution of credit or liquidity providers or their failure toperform (Note: There are currently no credit or liquidity providers for the Bonds).

(b) The Dissemination Agent shall, within five (5) business days of obtainingactual knowledge of the occurrence of any of the Listed Events, except events listed in clauses(a)(1), (4) or (5), notify the Disclosure Representative in writing of such event. The DisclosureRepresentative shall promptly notify the Dissemination Agent in writing whether or not to reportthe event pursuant to subsection (e).

(c) Whenever the District obtains knowledge of the occurrence of a Listed Event,whether because of a notice from the Dissemination Agent pursuant to subsection (b) or otherwise,the District shall file a notice of the occurrence of a Listed Event, with (i) the Repositories, or (ii)the State Repository, if any, if material.

(d) If the District sends notice pursuant to subsection (c) or otherwise, the Districtshall promptly notify the Dissemination Agent in writing. Such notice shall instruct theDissemination Agent to report the occurrence pursuant to subsection (e).

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(e) If the Dissemination Agent has been instructed by the District to report theoccurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence withthe Municipal Securities Rulemaking Board. Notwithstanding the foregoing:

(i) notice of the occurrence of a Listed Event described in subsections(a)(1), (4) or (5) shall be given by the Dissemination Agent unless the District gives theDissemination Agent affirmative instructions not to disclose such occurrence; and

(ii) notice of Listed Events described in subsections (a)(4) and (5) neednot be given under this subsection any earlier than the notice (if any) of the underlying event is givento Holders of affected Bonds pursuant to the Indenture.

6. Termination of Disclosure Agreement. This Disclosure Agreement shall terminateupon the defeasance, prior redemption or payment in full of all of the Bonds.

7. Identity of Obligated Persons. The District represents and warrants that, to the bestof its knowledge, each person, whether generally or through an enterprise, fund, or account of suchperson, who is committed by contract or other arrangement to support payment of all, or part, of theobligations on the Bonds has entered into an undertaking as defined in, and as required by, the Rule.

8. Dissemination Agent. The District may, from time to time, appoint or engage aDissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, andmay discharge any such Agent, with or without appointing a successor Dissemination Agent. If atany time there is not any other designated Dissemination Agent, the District shall be theDissemination Agent. The initial Dissemination Agent shall be Prager, Sealy & Co, LLC.

9. Amendment; Waiver. Notwithstanding any other provision of this DisclosureAgreement, the District and the Dissemination Agent may amend this Disclosure Agreement, andany provision of this Disclosure Agreement may be waived, if such amendment or waiver issupported by an opinion of counsel expert in federal securities laws, acceptable to both the Districtand the Dissemination Agent, to the effect that such amendment or waiver would not, in and ofitself, cause the undertakings herein to violate the Rule if such amendment or waiver had beeneffective on the date hereof but taking into account any subsequent change in or officialinterpretation of the Rule. The Dissemination Agent shall agree to any amendment so requested bythe District, except the Dissemination Agent shall retain sole and absolute discretion to agree to anyamendment so requested that affects the rights, powers, immunities, indemnities or compensationof the Dissemination Agent under this Disclosure Agreement.

10. Additional Information. Nothing in this Disclosure Agreement shall be deemed toprevent the District from disseminating any other information, using the means of dissemination setforth in this Disclosure Agreement or any other means of communication, or including any otherinformation in any Annual Report or notice of occurrence of a Listed Event, in addition to thatwhich is required by this Disclosure Agreement. If the District chooses to include any informationin any Annual Report or notice of occurrence of a Listed Event in addition to that which isspecifically required by this Disclosure Agreement, the District shall have no obligation under thisAgreement to update such information or include it in any future Annual Report or notice ofoccurrence of a Listed Event.

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11. Default. In the event of a failure of the District, the Disclosure Representative, theDeveloper or the Dissemination Agent to comply with any provision of this Disclosure Agreement,the Dissemination Agent may (and, at the request of any Participating Underwriter or the Holdersof at least 25% aggregate principal amount of Outstanding Bonds and receipt of indemnitysatisfactory to the Dissemination Agent, shall), or any beneficial owner of a bond may take suchactions as may be necessary and appropriate, including seeking mandate or specify performance bycourt order, to cause the District, the Disclosure Representative, the Developer, or the DisseminationAgent, as the case may be, to comply with its obligations under this Disclosure Agreement. Adefault under this Disclosure Agreement shall not be deemed an Event of Default under theIndenture, and the sole remedy under this Disclosure Agreement in the event of any failure of theDistrict, the Disclosure Representative, the Developer, or the Dissemination Agent to comply withthis Disclosure Agreement shall be an action to compel performance.

12. Dues, Immunities and Liabilities of Dissemination Agent. Article VI of the Indentureis hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solelyfor this purpose) contained in the Indenture. The Dissemination Agent shall have only such dutiesas are specifically set forth in this Disclosure Agreement.

13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of theDistrict, the Dissemination Agent, the Participating Underwriters and beneficial owners of theBonds, and shall create no rights in any other person or entity.

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14. 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.

Dated: February 27, 2003.

CELEBRATION COMMUNITYDEVELOPMENT DISTRICT,AS ISSUER

By:Chairman, Board of Supervisors

PRAGER, SEALY & CO., LLC, ASDISSEMINATION AGENT

By:Managing Director

ST. JOE/ARVIDA COMPANY, L.P.

By:Title:

ST. JOE RESIDENTIALACQUISITIONS,INC.

By:Title:

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EXHIBIT A

NOTICE TO REPOSITORIESOF FAILURE TO FILE ANNUAL REPORT

Name of District: Celebration Community Development District

Name of Bond Issue: $6,035,000 Special Assessment Bonds, Series 2003A

Date of Issuance: February 27, 2003

NOTICE IS HEREBY GIVEN that the District hasnot provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the ContinuingDisclosure Agreement dated as of February 15, 2003,between the District , the Dissemination Agent and theDeveloper named therein. The District has advised theundersigned that it anticipates that the Annual Report will befiled by ______________, 20____.

Dated:____________________

Prager, Sealy & Co., LLC, as Dissemination Agent

cc: District

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APPENDIX E

ASSESSMENT METHODOLOGY

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RIZZETTA & COMPANY

INCORPORATED

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According to the methodology described in the 1994 Report, the 1997 Report, the 1999 Report and the 2002A Report, the costs, benefits and associated special assessments to repay the 1994 Bonds, the 1997 Bonds, the 1999 Bonds and 2002 Bonds were allocated to all villages within the District except Island Village as shown in the following chart:

Special Assessment Bonds Series 1994, Series 1997, series 1999 and Series 2002A Allocations

VillageSeries1994

Series1997

Series1999

Series2002A

Celebration/ Celeb. West $54,932,994 $0 $0 $0South $ 1,156,888 $ 2,376,129 $ 17,515,000 $0North $ 3,908,828 $ 9,890,000 $0 $0South Village Future $2,448,504 (1) $5,028,982 (1) $0 $6,334,903 (2)

South Vill. Commercial $819,163 $1,682,477 $1,571,500 $7,386,386South Vill. Multi Family $188,623 $387,412 $673,500 $2,493,711 Total $63,455,000 $ 19,365,000 $ 19,760,000 $16,215,000 (3)

(1) Series 1994 debt re-allocated from South Village to South Village Future includes allocations to East Village, East Village 2, South Village 2 and Roseville Corner. The Series 1994 debt and the Series 1997B debt allocated to South Village 2 – Phase 5 was paid in full at the time of sale to Arvida.

(2) Series 2002A debt allocated to South Village Future includes only East Village, East Village 2 and Roseville Corner and does not include lands in South Village 2 – Phase 5.

(3) Total par amount of Series 2002A bonds is $18,285,000 to include $2,070,000 in unallocated contingency.

III. SERIES 2003 PROJECT (PHASE 5)

The District proposes to issue special assessment bonds, Series 2003A, to finance the acquisition and/or construction of certain Phase 5 infrastructure improvements as defined in the report of the District Engineer entitled “Celebration Phase 5 Engineering Report, Celebration Community Development District” dated January 14, 2003 prepared by PBS & J.

A description of these Improvements and estimated costs is shown in the table below.

CategoryEstimated

CostsRoads & Bridges (Subdivision) $2,672,325Earthwork $2,176,715Storm Water Mgt Systems $1,118,879Common Area Development $2,686,257Streetlights $457,992Professional Services $935,936

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APPENDIX F

AUDITED FINANCIAL STATEMENTS OF THE DISTRICTFOR THE YEAR ENDED SEPTEMBER 30, 2001

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